IKEJA HOTEL PLC
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Contents Page
Statement of Directors' responsibilities in relation to the consolidated financial statements 4
Report of the Directors 5
Independent Auditor's report 10
Report of the Statutory Audit Committee 13
Consolidated statement of financial position 14
Consolidated statement of profit or loss and other comprehensive income 15
Consolidated statement of changes in equity 16
Consolidated statement of cash flows 17
Notes to the consolidated financial statements 18
Other national disclosures:
Statement of value added 55
Financial summary - Group 56
Financial summary - Company 57
IKEJA HOTEL PLCCorporate Information
Country of Incorporation and Domicile: Nigeria
RC 10845
Directors: Chief Anthony Idigbe, SAN (Chairman)
Mr. Toke Alex Ibru
Mr. Ufuoma Ibru
Dr. Alexander Thomopulos
Mr. Kunle Aluko
Alhaji Abatcha Bulama, FCA
Mrs. Fadeke Olugbemi, FCA
Mr. Waheed Olagunju (Resigned wth effect from 17 May 2019)
Registered Office 84, Opebi Road
Ikeja
Lagos
Tel: 02-2701060, 01-4480887
Website: www.ikejahotelplc.com
Email: [email protected]
Company Secretaries: Punuka Nominees Limited
Plot 45 Oyibo Adjorho Street
Off Ayinde Akinmade Street
Off Admiralty Way
Lekki Penisula Phase 1, Lagos.
Bankers: Access Bank Plc
Zenith Bank Plc
Union Bank Plc
Sterling Bank Plc
Joint Auditors: Messrs Ugochukwu, Ike & Co
(Chartered Accountants)
1, Obalodu Street
Ilupeju - Lagos.
Ahmed Zakari & Co
(Chartered Accountants)
22B, Oladipo Diya Crescent
2nd Avenue Estate
Ikoyi-Lagos
Registrar: Greenwich Registrars and Data Solutions Limited
274, Murtala Muhammed Way
Yaba
Lagos
Email: [email protected]
IKEJA HOTEL PLC
The responsibilities include ensuring that:
i.
ii
iii
iv It is appropriate for the consolidated financial statements to be prepared on a going concern basis.
Signed on behalf of the Board of Directors by:
________________________________ _______________________________
Chief Anthony Idigbe, SAN Alhaji. Abatcha Bulama, FCA
Director Director
FRC/2014/NBA/00000010414 FRC/2014/ICAN/00000006535
Dated: 26 February 2020 Dated: 26 February 2020
The Group prepares its consolidated financial statements using suitable accounting policies supported by
reasonable and prudent judgments and estimates that are consistently applied; and
The Directors accept responsibility for the consolidated financial statements which have been prepared using
appropriate accounting policies supported by reasonable and prudent judgments and estimates in accordance
with the International Financial Reporting Standards; in compliance with Financial Reporting Council of Nigeria
Act, No 6, 2011 and in the manner required by the Companies and Allied Matters Act, CAP C20, Laws of the
Federation of Nigeria 2004.
The Directors are of the opinion that the consolidated financial statements give a true and fair view of the state
of the financial affairs of the Group and of its profit for the year ended 31 December 2019.
The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in
the preparation of consolidated financial statements, as well as adequate systems of internal financial control.
Nothing has come to the attention of the Directors to indicate that the Group will not remain a going concern for
at least twelve months from the date of this statement.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RELATION TO THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
In accordance with the provisions of the Companies and Allied Matters Act, the Directors are responsible for
the preparation of consolidated financial statements which give a true and fair view of the state of affairs of the
group at the end of the year and its profit or loss and other comprehensive income.
The Group keeps proper accounting records that disclose, with reasonable accuracy, the financial position
of the group and comply with the requirements of the Companies and Allied Matters Act;
Appropriate and adequate internal controls are established to safeguard its assets and to prevent and
detect fraud and other irregularities;
4
IKEJA HOTEL PLC
REPORT OF THE DIRECTORS
For The Year Ended 31 December 2019
1. Legal Status and principal activities
2. State of Affairs
3. Operating Result
2019 2018 2019 2018
N'000 N'000 N'000 N'000
Turnover 12,515,560 13,226,569 7,327,284 7,249,133
Profit before taxation 1,147,080 1,229,079 679,468 827,273
Tax charge (312,134) (123,720) (138,352) (150,239)
Profit after taxation 834,946 1,105,359 541,116 677,034
4. Additions to property, plant and equipment
5. Dividend
6. Directors and their interest
The Directors who held office for the year ended 31st December 2019, together with their direct and indirect
interests in the issued share capital of the Company as recorded in the Register of Director’s shareholding and/or
as notified by the Directors for the purposes of sections 275 and 276 of the Companies and Allied Matters Act and
the listing requirement of the Nigerian Stock Exchange are noted below:
Resulting from the above, the Directors have reasonable expectation that the Company possesses adequate
resources to continue operations for the foreseeable future. Thus, the Directors have continued with the adoption
of the going concern basis of accounting in preparing the annual financial statements.
The Directors propose a final dividend of 2kobo per 50kobo ordinary share thereby bringing the total dividend for
the financial year to 5kobo. The interim dividend paid and the final dividend proposed shall be presented to the
shareholders for ratification at the next Annual General Meeting.
The Directors are pleased to submit to the members of Ikeja Hotel Plc (the “Company”), its report together with the
audited financial statements for the year ended 31 December 2019.
The CompanyThe Group
The Company was incorporated as Properties Development Limited on November 18,1972 with a view to provide
world class hotel and catering services to meet the needs of an ever-increasing number of local and international
business and leisure travelers visiting the city of Lagos. The Company’s name was later changed to Ikeja Hotel
Limited in 1980 and though it became a public Company in 1983, it assumed its present name in February 5, 1991.
The Company’s principal activity remains the development of hotel leisure facilities, operations of hotels and
provision of catering services.
The Company also owns majority shareholding in Hans Gremlin Limited and the financial statements of Hans
Gremlin has been consolidated with the Company’s Group financial statements.
The Directors have assessed the Company’s ability to continue as a going concern and have no reason to believe
that the Company will not remain a going concern in the years ahead.
Additions to property, plant and equipment during the year ended 31 December 2019 for the Group and Company
amounted to N552.941 million and N310.864 million respectively (31 December 2018: N451.910 million and
N263.196 million respectively). Details of movements in property, plant and equipment for the Group and
Company are shown on Notes 7.1 and 7.2 respectively of the financial statements.
During the 2019 financial year, The Board of Directors declared and paid an interim dividend of 3kobo per 50kobo
share for the second quarter period ended 30 June 2019. The dividend was paid after the deduction of withholding
tax at the appropriate rate.
5
IKEJA HOTEL PLC
REPORT OF THE DIRECTORS
For The Year Ended 31 December 2019
Direct Indirect Direct Indirect
Dr. Alexander Thomopulus 1,869,205 1,869,205
Mr Kunle Aluko (Aluko Moses) 60,000 60,000
Alhaji Bulama Abatcha, FCA 1,096,235 -
7. Substantial Shareholdings
Name No. of 50k shares %
Oma Investments Ltd 544,536,537 26.19
Wagmest Nigeria Limited 180,148,768 8.67
RFC Limited 152,410,464 7.33
Alurum Investment Limited 112,914,212 5.43
Dr. Obafoluke Otudeko, MFR, OFR 105,840,000 5.09
Associated Ventures International Limited 155,183,927 7.47
8. Directors Responsibilities
9. Corporate Governance
9. Corporate Governance (continued)
The Directors who served during the year under review are;
Chief Anthony Idigbe, SAN
Alhaji Bulama Abatcha, FCA
Mrs. Fadeke Olugbemi, FCA
Mr. Kunle Aluko
Dr. Alexander Thomopulos
Mr. Toke Alex- Ibru
Mr. Ufuoma Ibru
The Directors accept responsibility for the preparation of the financial statements that gives a true and fair view in
accordance with requirements of the International Financial Reporting Standards.
As at 31 December 2019, no shareholder held more than 5% of the issued capital of the Company, except as stated
below:
2019No. of shares held
2018No. of shares held
The Directors further accept responsibility for maintaining adequate accounting records as required by the
Companies and Allied Matters Act and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material misstatement whether due to fraud or error.
The Directors are responsible for the corporate governance of the Company. The Directors have a responsibility to
ensure that proper accounting records are kept and that the financial status of the Company at all times disclosed
with reasonable accuracy. The Directors are responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards (IFRS) and in the manner required by
the Companies and Allied Matters Act, CAP C20, LFN 2004 and the Financial Reporting Council of Nigeria Act
2011. In this regards, the responsibility of the Directors includes: designing, implementing and maintaining
internal controls relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud error, selecting and applying appropriate accounting policies and making
accounting estimates that are reasonable in the circumstances.
As at the day of this report, the Board consist of seven Directors. The Board meets regularly to decide on policy
matters and direct the affairs of the Company. During these meetings, the Directors also review the Company’s
performance, operations and finances and set standards for the ethical conduct of the business.
6
IKEJA HOTEL PLC
REPORT OF THE DIRECTORS
For The Year Ended 31 December 2019
Mr. Waheed Olagunju (Resigned with effect from 17 May 2019)
Name No. attended
Chief Anthony Idigbe SAN 5
Alhaji Bulama Abatcha, FCA 5
Mrs. Fadeke Olugbemi, FCA 4
Mr. Kunle Aluko 5
Dr. Thomopulos Alexander 4
Mr. Toke Alex- Ibru 5
Mr. Ufuoma Ibru 5
Mr. Waheed Olagunju Nil Resigned with effec from 17 May 2019
10. Complaints Management Policy Framework
11. Human Resources Policy
(a.) Recruitment
(b.) Diversity and Inclusion
(c.) Employment of Physically challenged persons
11. Human Resources Policy (continued)
(d.) Employees’ Involvement and Training
12. Dealing in Issuers' Shares Policy
The Board met five times during the financial year (26 February 2019, 16 April 2019, 19 July 2019, 22 October
2019 and 19 November 2019). In accordance with Section 258(2) of the Companies and Allied Matters Act, CAP
C20 LFN 2004, the record of directors’ attendance at board meetings held during the financial year under review is
set below:
The Board has approved the Complaints Management Policy and Procedure Manual and same is available on the
Company’s website. The policy aims to establish a fair, impartial and objective complaints management policy for
the handling of the complaints/enquires from shareholders, customers regulatory agencies and the other
stakeholders.
In accordance with the Post-Listing Rules of the Nigerian Stock Exchange, Ikeja Hotel Plc has in place a share
dealing policy which regulates securities transactions by its Directors, Employees and other Insiders on terms
which are no less exacting than the required standard set out in the Nigerian Stock Exchange Rules. The Policy is
to be communicated periodically to derive compliance. In respect of the year ended 31 December 2019, the
Directors of Ikeja Hotel Plc hereby confirm that: A code of conduct regarding securities transactions by all
Directors was adopted by the Company.
Employees are regularly provided with information on matters concerning the Company and their welfare.
Management holds regular formal and informal meetings with Staff Unions resulting in cordial industrial relations
throughout the year. Employees are given regular training on the job or in other hotels in the Sheraton group to
equip them with the skills and knowledge required for the efficient performance of their duties.
The Company conformed with all regulatory requirements in the employment of staff, whilst also ensuring that
only fit and proper persons are approved for appointment to the Board or top management positions. All prescribed
pre-employment screening for prospective employees and other requirements for regulatory confirmation of top
management appointment were duly implemented.
The Company treats all employees, prospective employees and customers fairly and equally, regardless of their
gender, sexual orientation, family status, race, color, nationality, ethnic or national origin, religious belief, age,
physical or mental disability, or any such factor.
The Company operates a non-discriminatory policy in the consideration of applications for employment, including
those received from physically challenged persons.
In the event that an employee becoming physically challenged in the course of employment, where possible, the
Company is in a position to arrange appropriate training to ensure the continuous employment of such person
without subjecting him/her to any disadvantage in his/her career development.
7
IKEJA HOTEL PLC
REPORT OF THE DIRECTORS
For The Year Ended 31 December 2019
13. Board Committees
Finance, Risk and General Purpose Committee
Finance, Risk and General-Purpose Committee
Alhaji Bulama Abatcha, FCA- (Chairman) 4
Mrs Fadeke Olugbemi, FCA 4
Mr Toke Alex- Ibru 4
Mr Ufuoma Ibru 4
Dr. Thomopulos Alexander 3** Dr. Thomopulos Alexander was on vacation and could not attend one of the meetings.
Nominations Establishment Governance Committee
Mrs. Fadeke Olugbemi, FCA-(Chairman) 4
Mr. Toke Alex- Ibru 4
Mr. Ufuoma Ibru 4
Mr. Kunle Aluko 4
Alhaji Bulama Abatcha, FCA- (Chairman) 4
14. Audit Committee
Chief Victor C.N. Oyolu, FCA 3 Resigned at the 2018 Annual General Meeting
Alhaji Bulama Abatcha, FCA- (Chairman) 5
Alhaji Wahab A. Ajani 5
Mr. Adelakun Lukmon Adesola 5
Mr. Kunle Aluko 5
Dr. Thomopulos Alexander 5
Mr. Peter Eyanuk 5 Appointed at the 2018 Annual General Meeting
15. Company Distributors
The Company has no distributors.
16. Auditors
17. Donations
The Nominations Establishment Governance Committee Board met four times during the financial year (19
February 2019, 15 April 2019, 11 July 2019 and 17 October 2019). The record of directors’ attendance at this
committee meetings held during the financial year under review is set below:
In accordance with Section 359(3) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the Company
has an Audit Committee comprising three directors and three representatives of the shareholders carrying out its
function as set out in Section 359(6) of the Companies and Allied Matters Act, CAP C20 LFN 2004. The Audit
Committee met five times (18 February 2019, 12 April 2019, 10, July 2019, 17 October 2019 and 19 November
2019). Those who served on the Audit Committee during the year under review and their attendance at the meeting
are:
The board for the year under review had three committees, Finance, Risk and General Purpose Committee,
Nominations Establishment Governance Committee and Audit Committee.
The Finance, Risk and General-Purpose Committee Board met four times during the financial year (19 February
2019, 15 April 2019, 11 July 2019, and 17 October 2019). The record of directors’ attendance at this committee
meetings held during the financial year under review is set below:
In accordance with the Post-Listing Rules of the Nigerian Stock Exchange, Ikeja Hotel Plc has in place a share
dealing policy which regulates securities transactions by its Directors, Employees and other Insiders on terms
which are no less exacting than the required standard set out in the Nigerian Stock Exchange Rules. The Policy is
to be communicated periodically to derive compliance. In respect of the year ended 31 December 2019, the
Directors of Ikeja Hotel Plc hereby confirm that: A code of conduct regarding securities transactions by all
Directors was adopted by the Company.A specific enquiry of all Directors has been made during the reporting period and there is no incidence of
noncompliance with the listing rules of the Nigerian Stock Exchange, and Ikeja Hotel Plc's code of conduct,
regarding securities transactions by Directors.
Ahmed Zakari & Co and Ugochukwu, Ike & Co being Joint Auditors have indicated their willingness to continue
in offices as the Company’s Auditors.
8
IKEJA HOTEL PLC
REPORT OF THE DIRECTORS
For The Year Ended 31 December 2019
18. Compliance with regulatory requirement
All regulatory requirements were complied with during the year under review. There was no contravention.
BY ORDER OF THE BOARD
Chisom Umofia
FRC/2019/NBA/00000019212
Punuka Nominees Ltd
Secretary
26 February 2020
In compliance with Section 38(2) of the Companies and Allied Matters Act, CAP C20, LFN 2004, the Company
did not make any donation or gift to any political party, political association or for any political purpose during the
2019 financial year.
9
REPORT OF THE STATUTORY AUDIT COMMITTEE
For the Year Ended 31 December 2019
To the members of Ikeja Hotel Plc
--------------------------------------------
Alhaji Abatcha Bulama
FRC/2014/ICAN/00000006535
Chairman, Audit Committee
17 February 2020
Members of the Audit Committee are:
Alhaji Bulama Abatcha, FCA- (Chairman) Chairman
Alhaji Wahab A. Ajani Shareholder
Mr. Adelakun Lukmon Adesola Shareholder
Mr. Kunle Aluko Director
Dr. Thomopulos Alexander Director
Mr. Peter Eyanuk Shareholder
We have exercised our statutory functions under Section 359(6) of the Companies and Allied
Matters Act of Nigeria and acknowledge the cooperations of management and staff in the
conduct of these responsibilities.
We are of the opinion that the accounting and reporting policies of the Company and Group are
in agreement with legal requirements and agreed ethical practices and that the scope and
planning of both the external and internal audits for the Year Ended December 31, 2019 was
satisfactory and reinforce the Group’s internal control systems.
In accordance with the provision of Section 359(6) of the Companies and Allied Matters Act of
Nigeria, the members of the Audit Committee of Ikeja Hotel Plc hereby report on the financial
statements for the Year Ended December 31, 2019 as follows:
We have deliberated on the findings of the external auditors and have confirmed that necessary
cooperation was received from management in the course of their statutory audit and we are
satisfied with management’s responses to the external auditors’ recommendations thereon and
with the effectiveness of the Company’s system of accounting and internal control.
13
IKEJA HOTEL PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2019
2019 2018 2019 2018
Notes N'000 N'000 N'000 N'000AssetsNon current assets
Property, plant and equipment 7 9,950,728 5,949,416 8,075,375 3,888,645
Investment Property 8 4,630,087 4,630,087 - -
Capital work in progress 9 4,216,034 6,529,985 13,446 4,238,336
Intangible asset 10 4,619,383 4,487,764 6,137 8,995
Investment in subsidiaries 11 - - 4,444,518 4,444,518
Investment accounted for using the equity method 12 - 147,014 798,722 798,722
23,416,232 21,744,266 13,338,198 13,379,216
Current assets
Inventories 14 654,525 670,302 130,716 55,333
Trade receivables 15 1,250,773 1,065,266 962,689 711,582
Other receivables and prepayments 16 827,307 1,476,348 543,198 759,886
Loan to related party 17 6,752,300 6,455,477 6,752,300 6,455,477
Amount due from related parties 18 113,188 113,188 733,547 722,829
Cash and cash equivalents 19 5,656,450 6,292,323 3,224,817 2,524,787
15,254,543 16,072,905 12,347,267 11,229,894
Total assets 38,670,775 37,817,171 25,685,465 24,609,110
Equity and liabilities
Share capital 26.2 1,039,398 1,039,398 1,039,398 1,039,398
Share premium 27 1,381,072 1,381,072 1,381,072 1,381,072
Retained earnings 28 12,329,582 11,673,832 6,357,112 5,682,469
14,750,052 14,094,302 8,777,582 8,102,939
Non-controlling interest 29 4,620,530 4,355,626 - -
Total equity 19,370,582 18,449,928 8,777,582 8,102,939
Non-current liabilities
Amount due to related parties 23 7,040,852 6,286,936 8,415,126 7,835,409
Retirement benefit obligations 25 1,770,575 2,334,784 1,457,105 1,728,301
Deferred tax 24.2 553,841 611,127 134,615 188,252
9,365,268 9,232,847 10,006,846 9,751,962
Current liabilities
Trade and other payables 20 3,688,993 4,054,306 1,279,658 1,252,102
Deferred income 21 5,572,913 5,259,561 5,382,488 5,085,665
Dividend payable 22 109,845 109,845 16,691 16,691
Deposit for shares 44 93,600 93,600 93,600 93,600
Current tax payables 24.1 469,574 617,083 128,600 306,151
9,934,925 10,134,395 6,901,037 6,754,209
Total liabilities 19,300,193 19,367,242 16,907,883 16,506,171
Total equity and liabilities 38,670,775 37,817,170 25,685,465 24,609,110
Director
FRC/2014/ICAN/00000006535
Equity attributable to equity holders
of the Parent
The Group
The accompanying notes on pages 18 to 53 and the other national disclosures on pages 55 to 57 form an integral part of these
consolidated financial statements.
The Company
These consolidated financial statements were approved and authorised for issue by the Board of Directors and were signed on its
behalf on 26 February 2020.
FRC/2018/ICAN/00000017858
Mr. Theophilus E. Netufo
Ag. Managing Director/CEO
FRC/2013/ICAN/00000004775
Mr. Zacchaeus O. Adeyemo
Controller of Finance
Chief Anthony Idigbe, SAN
Chairman
FRC/2014/NBA/00000010414
Alhaji Abatcha Bulama
14
IKEJA HOTEL PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018
Notes N'000 N'000 N'000 N'000
Continuing operations
Revenue from contract with customers 30 12,515,560 13,226,569 7,327,284 7,249,133
Cost of sales 32 (8,937,875) (9,540,474) (4,805,718) (4,670,742)
Gross profit 3,577,685 3,686,095 2,521,566 2,578,391
Other income 33 440,949 286,156 33,698 117,176
Sales and marketing expenses (281,870) (236,584) (281,870) (236,584)
Administrative expenses 34 (1,840,132) (1,730,910) (994,028) (983,406)
Operating profit 1,896,632 2,004,757 1,279,366 1,475,577
Finance income 35 151,378 109,357 178,122 68,722
Finance costs 36 (753,916) (717,026) (778,020) (717,026)
12 (147,014) (168,009) - -
1,147,080 1,229,079 679,468 827,273 Income tax expense 24.3 (312,134) (123,720) (138,352) (150,239)
834,946 1,105,359 541,116 677,034
Profit attributable to:
570,042 763,991 541,116 677,034
264,904 341,369 - -
Profit for the year 834,946 1,105,359 541,116 677,034
Other comprehensive income:
25.3 195,891 - 195,891 -
195,891 - 195,891 -
Total comprehensive income for the year 1,030,837 1,105,359 737,007 677,034
765,933 763,991 737,007 677,034
264,904 341,369 - -
1,030,837 1,105,359 737,007 677,034
Basic earnings per share (Kobo) 40 53 26 33
Equity holders of the parent
Non-controlling interest
Profit before tax
Share of loss in investment accounted for
using the equity method
The accompanying notes on pages 18 to 53 and the other national disclosures on pages 55 to 57 form an integral
part of these consolidated financial statements.
Profit for the year from continuing
operations
Re-measurement gain/(Loss) of defined
benefit plan
Items that will not be reclassified
subsequently to profit or loss:
Other comprehensive income for the year net
of tax
The CompanyThe Group
Equity holders of the parent
Non-controlling interest
Total comprehensive income for the year
attributable to:
15
IKEJA HOTEL PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2019
Ordinary
shares
Share
premium
Retained
earnings Total
Non
controlling
interest Total equity
Ordinary
shares
Share
premium
Retained
earnings Total equity
N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Attributable to equity holders of the Parent
At 1 January 2018 1,039,398 1,381,072 10,909,841 13,330,311 4,014,257 17,344,568 1,039,398 1,381,072 5,005,435 7,425,905
Changes in equity for 2018
Profit for the year - - 763,991 763,991 341,369 1,105,360 - - 677,034 677,034
Re-measurement Loss on defined benefit plans - - - - - - - - - -
Total comprehensive income for the year - - 763,991 763,991 341,369 1,105,360 - - 677,034 677,034
At 31 December 2018 1,039,398 1,381,072 11,673,832 14,094,302 4,355,626 18,449,928 1,039,398 1,381,072 5,682,469 8,102,939
Attributable to equity holders of the parent
At 1 January 2019 1,039,398 1,381,072 11,673,832 14,094,302 4,355,626 18,449,928 1,039,398 1,381,072 5,682,469 8,102,939
Changes in equity for 2019
Profit for the year - - 570,042 570,042 264,904 834,947 - - 541,116 541,116
Re-measurement gain on defined benefit plans - - 195,891 195,891 - 195,891 - - 195,891 195,891
Interim Dividend (110,183) (110,183) (110,183) (62,364) (62,364)
Total comprehensive income for the year - - 655,750 655,750 264,904 920,655 - - 674,643 674,643
At 31 December 2019 1,039,398 1,381,072 12,329,582 14,750,052 4,620,530 19,370,583 1,039,398 1,381,072 6,357,112 8,777,582
The accompanying notes and statement of significant accounting policies form an integral part of these consolidated financial statements.
The CompanyThe Group
16
IKEJA HOTEL PLCCONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018
Notes N'000 N'000 N'000 N'000
Profit before tax 1,147,080 1,229,079 679,468 827,273
Adjustment for:
Depreciation of property, plant and equipment 7 817,483 731,041 389,988 349,025
Amortisation of intangible asset 8 70,256 14,018 2,858 2,024
12 147,014 168,009 - -
Dividend income 33 - - (26,744) (26,744)
Post employment benefit expense 320,356 234,930 320,356 234,930
Interest on placements with banks (151,378) (109,357) (151,378) (41,978)
Finance cost 36 753,916 717,026 778,020 717,026
Loss/(profit) on disposal of property, plant and equipment 33 (9,750) - (9,750) -
Impairment Allowance 25,690 - 6,296 -
Impairment Allowance written back 17.1 (125,800) (83,139) (14,549) -
2,994,867 2,901,607 1,974,565 2,061,556
Changes in:
(Increase)/decrease in inventories 15,777 320,246 (75,383) 211,362
Increase in trade receivables (85,397) (11,898) (242,854) (97,016)
Decrease/(increase) in other receivables and prepayments 649,041 (418,759) 216,688 21,979
(Increase)/decrease in due from related party - 109,221 (10,718) (237,501)
Decrease/(increase) in trade and other payables (365,313) 344,768 27,555 138,401
Increase/(decrease in deferred income 16,529 (22,765) - -
Cash generated from operating activities 3,225,504 3,222,420 1,889,853 2,098,781
Income tax paid 24.1 (516,929) (262,948) (369,540) (27,398)
Post employment benefits paid (688,674) (435,034) (395,661) (145,320)
Net cash from operating activities 2,019,901 2,524,438 1,124,652 1,926,063
Cash flows from investing activities
Purchase of property plant and equipment 7 (552,941) (451,910) (310,863) (263,196)
Purchase of intangible assets 10 (201,875) (834) - (834)
Adjustment in property plant and equipment - 2,100 - 2,100
Proceed on disposal of property, plant and equipment 20,040 - 20,040 -
Dividend received - - 26,744 26,744
Interest on placements with banks 151,378 109,357 151,378 41,978
Additions to capital work in progress 9 (1,962,193) (209,589) (51,254) (126,495)
Net cash used in investing activities (2,545,591) (550,876) (163,955) (319,703)
Cash flows from financing activities
Payment to related parties 23.1 - - (198,303) (36,910)
Dividend paid 22 (110,183) (47,819) (62,364) -
Net cash used in financing activities (110,183) (47,819) (260,667) (36,910)
Net increase/(decrease) in cash and cash equivalents (635,873) 1,925,743 700,030 1,569,450
Cash and cash equivalents at 1 January 6,292,323 4,366,580 2,524,787 955,337
Cash and cash equivalents at 31 December 19 5,656,450 6,292,323 3,224,817 2,524,787
5,656,450 6,292,323 3,224,817 2,524,787
The Group The Company
Net cash from operating activities before changes in
working capital
Share of loss in investment accounted for using the equity
method
The accompanying notes and statement of significant accounting policies form an integral part of these consolidated financial
statements.
17
(368,318) (198,136) (75,305) 91,578
(320,356) (236,898) (320,356) (236,898)
17
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
1. The Group
1.1 The reporting entity
1.1.1 The Group
1.2 The Company
1.3
1.4 Principal activities
2. Basis of preparation
2.1 Functional and presentation currency
2.2 Going concern status
2.3 Basis of consolidation
3. Basis of measurement
Corporate officeThe registered office of the company is 84, Opebi Road, Ikeja, Lagos, Nigeria.
The consolidated financial statements are presented in naira, which is the group's functional and presentational
currency. The consolidated financial statements are presented in the currency of the primary economic
environment in which the group operates (its functional currency). For the purpose of the consolidated financial
statements, the consolidated results and financial position are expressed in naira, which is the functional currency
of the group and the presentational currency for the financial statements.
The consolidated financial statements have been prepared on a going concern basis, which assumes that the
entity will be able to meet its financial obligations as at when they fall due. There are no significant financial
obligations that will impact on the entity's resources which will affect the going concern of the entity. Management
is satisfied that the entity has adequate resources to continue in operational existence for the foreseable future.
For this reason, the going concern basis has been adopted in preparing the consolidated financial statements.
The consolidated financial statements comprise the financial statements of the company and its subsidiaries as at
31 December, 2019. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the
group obtains control, and continues to be consolidated until the date when such control ceases. The financial
statements of the subsidiaries are prepared for the same reporting period as the parent company, using the same
accounting policies.
All inter-group balances, transactions, dividends, unrealised gains on tranasctions within the Group are eliminated
on consolidation. Unrealised losses resulting from inter-group transactions are eliminated, but only to the extent
that there is no evidence of impairment.
The group comprise Ikeja Hotel Plc. and its subsidiary - Hans Gremlin Limited, a special purpose vehicle which
holds 51% of the ordinary shares in Capital Hotels Plc, Charles Hampton and IHL Services Limited with 100%
shareholdings.
Ikeja Hotel Plc., formerly Properties Development Limited, was incorporated on 18 November, 1972. It owns the
Sheraton Lagos Hotel, and is a core investor in Hans Gremlin Nigeria Limited (Owners of Capital Hotel Plc. It also
has significant shareholding in the Tourist Company of Nigeria Plc. (Owners of Federal Palace Hotel & Casino,
Lagos).
The Hotel was managed and operated by Starwood Eame License and Services Company BVBA up to June
2017 under an agreement dated 31 October 1980 and renewed 1 April 2008. Subsequently Marriot International
took over the management of the Sheraton brand from June 2017 due to acquisition of Starwood Eame License
and Services Company BVBA.
The principal activities of the group are operation of hotels and restaurants, apartment letting, recreational
facilities, night clubs and business centre services, advisory and consultancy services.
These financial statements have been prepared in accordance with the International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board (IASB) and in the manner required by
the Companies and Allied Matters Act Cap C.20, Laws of the Federation of Nigeria, 2004, the Financial Reporting
Council of Nigeria Act, 2011.
The financial statements have been prepared under the historical cost basis except for the following:
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
18
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
- Investment properties measured at fair value.
- Financial assets classified as amortised cost measured at amortised cost.
-
-
- Financial liablities including borrowings measured at fair value.
-
- Inventory measured at lower of cost and net realisable value.
4. Critical accounting estimates and judgement
4.1 Asset useful lives and residual values:
4.2 Taxes
i
ii
4.3 Provisions/contingencies
4.4 Impairment of financial assets
4.5
Uncertainties exist with respect to the amount and timing of future taxable income. Given the complexities of
existing contractual agreement, differences arising between the actual results and the assumptions made could
necessitate future adjustment to tax income and expenses already recorded. The Company establishes provisions
based on reasonable estimates.
Deferred taxes are recognised for all unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable
profits together with future tax planning strategies.
Provisions are liabilities of uncertain timing and are recognised when the entity has a present legal or constructive
obligation as a result of past events; it is probable that an outflow of resources will be required to settle the
obligation; and the amount that can be reliably estimated. Provisions are not recognised for future operating
losses.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial
basis using various assumptions that may differ from actual developments in future. The assumptions used
include the discount rate, future salary increases, mortality rates and future pension increases. Changes in these
assumptions will impact the carrying amount of the pension obligation. The Group determines the appropriate
discount rate at each reporting date. In determining the appropriate discount rate, management considers the
interest rates of corporate bonds that are denominated in the currency in which the benefits will be paid and that
have terms to maturity approximating the expected term of the related pension obligation.
The estimates and judgements that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are as follows:
Property, plant and equipment are depreciated over their useful lives, taking into account residual values where
appropriate. The actual useful lives of the assets and residual values are assessed annually and may vary
depending on a number of factors. In re-assessing asset useful lives, factors such as technological innovation,
product life cycles and maintenance programmes are taken into account. Residual value assessments consider
issues such as future market conditions, the remaining life of the assets and projected disposal values.
Retirement benefit obligation
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Financial assets designated at fair value through other comprehensive income measured at fair value
through other comprehensive income.
Financial asets designated at fair value through profit or loss measured at fair value through profit or loss.
defined benefit obligations measure at the discounted future value of all expected future obligations plus past
service costs and actuarial loss less actuarial gains.
Impairment of financial assets is based on the application of the expected credit loss model (ECL) in accordance
with IFRS 9, Financial Instruments. The measurement of expected credit loss by the Group under IFRS 9 reflects
an unbiased and probability-weighted amount that is determined by evaluating the range of possible outcomes as
well as incorporating the time value of money. Also, management considers reasonable and supportable
information about past events, current conditions and reasonable and supportable forecasts of future economic
conditions when measuring expected credit losses. Management considers the risk or probability that a credit loss
occurs by considering the possibility that a credit loss occurs and the possibility that no credit loss occurs, even if
the probability of a credit loss occurring is low. The application of variables under this model involves estimates
which require significant judgemet by management.
19
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
4.6 Investment property
4.7 Impairment of inventory
5.
5.1
Standard
IFRS 3 Business Combination 01-Jan-20
IAS 1 & IAS 8 Definition of Material 01-Jan-20
IFRS 17 Insurance Contracts 01-Jan-21
5.2 Amendments to IFRS 3 (Business Combination)
They include:
• Narrow the definitions of a business and of outputs by focusing on goods and services
provided to customers and by removing the reference to an ability to reduce costs.
• Add guidance and illustrative examples to help entities assess whether a substantive
process has been acquired.
• Remove the assessment of whether market participants are capable of replacing any
missing inputs or processes and continuing to produce outputs: and
• Add an optional concentration test that permits a simplified assessment of whether an
acquired set of activities and assets is not a business.
5.3 Amendment to IAS 1 and IAS 8
5.3 Amendment to IAS 1 and IAS 8 (continued)
• If the language regarding a material item, transaction or other event is vague or unclear;
The following standards have been issued or amended by IASB but are yet to become effective for annual periods
beginning on or after 1 January 2019
IFRS 3 (Business Combinations) outlines the accounting when an acquirer obtains control of a business (e.g.) An
acquisition or merger). In October 2018, after the post implementation review of IFRS 3, the IASB issued an
amendment to IFRS 3 which centers majorly on the definition of a Business.
The effective date is on or after 1st January 2020. This amendment does not have any impact on the company.
• That to be considered a business, an acquired set of activities and assets must include, at minimum, an input
and a substantive process that together significantly contribute to the ability to create outputs:
In October 2018, the IASB issued the definition of ‘material’. The amendments are intended to clarify, modify and
ensure that the definition of ‘material’ is consistent across all IFRS. in IAS 1 (Presentation of Financial
Statements) and IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), the revised definition
of ‘material’ is quoted below:
“An information is material if omitting, misstating or obscuring it could reasonably be expected to influence
decisions that the primary users of general purpose financial statements make based on those financial
statements, which provide financial information about a specific reporting entity”.
The amendments laid emphasis on five (5) ways material information can be obscured. These include:
• If information regarding a material item, transaction or other event is scattered in different places in the financial
statements;
The Group/Company has not applied the following new or amended standards in preparing these consolidated
and separate financial statements as it plans to adopt these standards at their respective effective dates.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial
basis using various assumptions that may differ from actual developments in future. The assumptions used
include the discount rate, future salary increases, mortality rates and future pension increases. Changes in these
assumptions will impact the carrying amount of the pension obligation. The Group determines the appropriate
discount rate at each reporting date. In determining the appropriate discount rate, management considers the
interest rates of corporate bonds that are denominated in the currency in which the benefits will be paid and that
have terms to maturity approximating the expected term of the related pension obligation.
The inventory provision is based on average loss rates of inventory in recent months. The provision makes use of
inventory counts performed which is considered to be representative of all inventory items held.
Investment properties are initially recognsed at cost and subsequently carried at fair value, determined annually
by independent professional valuers on the highest and best use basis. Changes in fair values are recognised in
profit or loss. Investment properties are subject to renovations or improvements at regular intervals. The cost of
major renovations and improvements is capitalised and the carrying amounts of the replacement components are
recognised in profit or loss. The cost of maintenance, repairs and minor improvements is recognised in profit or
loss when incurred. On disposal of an investment property, the difference between the disposal proceeds and the
carrying amount is recognised in profit or loss.
Standards and interpretations issued/amended but not yet effective.
Amendments effective from annual periods beginning on or after 1 January 2020
At the date of authorisation of these financial statements, the following Standards and Interpretations which have
not been applied in these financial statements, were in issue but not yet effective for the year presented:
20
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
• If dissimilar items, transactions or other events are inappropriately aggregated;
• If similar items, transactions or other events are inappropriately disaggregated; and
5.4 IFRS 17 - Insurance Contracts
6. Summary of significant accounting policies
6.1 Investments in subsidiaries
Control is usually present when an entity has: • power over more than one-half of the voting rights of the other entity;• power to govern the financial and operating policies of the other entity;
6.2 Investments in associates
6.3 Investments in joint ventures
6.4 Investments in special purpose entities (SPEs)
The consolidated financial statements incorporates the financial statements of the company and all its
subsidiaries where it is determined that there is a capacity to control. Control means the power to govern, directly
or indirectly, the financial and operating policies of an entity so as to obtain benefits from its activities. All the facts
of a particular situation are considered when determining whether control exists.
• If information regarding a material item, transaction or other event is scattered in different places in the financial
statements;
• If material information is hidden by immaterial information to the extent that it becomes unclear what information
is material.
The amendments are effective for annual reporting periods beginning on or after 1st January 2020. The company
has taken into consideration the new definition in the preparation of its annual account.
IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1 January 2021.
The new IFRS 17 standard establishes the principles for the recognition, measurement, presentation and
disclosure of Insurance contracts within the scope of the Standard. The objective of IFRS 17 is to ensure an entity
provides relevant information that faithfully represents those contracts. This information gives a basis for users of
financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial
performance and cash flows. This standard does not impact the company/group in anyway as the company/group
and its subsidiary companies do not engage in insurance business.
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an
interest in a joint venture. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies. The investment in an associate is
initially recognized at cost in the separate financial statements, however in its consolidated financial statements; it
is recognized at cost and adjusted for in the Group’s share of changes in the net assets of the investee after the
date of acquisition, and for any impairment in value. If the Group’s share of losses of an associate exceeds its
interest in the associate, the group discontinues recognizing its share of further losses.
A joint venture is an entity over which the Group has joint control. Joint control is the contractually agreed sharing
of control over an economic activity, and exists only when the strategic financial and operating decisions relating
to the activity require the unanimous consent of the parties sharing control. The investment in a joint venture is
initially recognized at cost and adjusted for in the Group’s share of the changes in the net assets of the joint
venture after the date of acquisition, and for any impairment in value. If the Group’s share of losses of a joint
venture exceeds its interest in the joint venture, the company discontinues recognizing its share of further losses.
SPEs are entities that are created to accomplish a narrow and well-defined objective. The financial statements of
the SPE is included in the consolidated financial statements where on the substance of the relationship with the
Group and the SPE's risk and reward, the Group concludes that it controls the SPE.
The principal accounting policies applied in the preparation of these consolidated financial statemnts are set out
below. These policies have been applied consistently for all the years presented, unless otherwise stated.
In its separate accounts, the Company accounts for its investment in subsidiaries at cost.
• power to appoint or remove the majority of the members of the board of directors or equivalent governing body;
• power to cast the majority of votes at meetings of the board of directors or equivalent governing body of the
entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date that control ceases. Changes in the Group’s interest in a subsidiary that do not result
in a loss of control are accounted for as equity transactions (transactions with owners).
Inter-company transactions, balances and unrealised gains on transactions between companies within the Group
are eliminated on consolidation. Unrealised losses are eliminated in the same manner as unrealised gains, but
only to the extent that there is no evidence of impairment. Consistent accounting policies are used throughout the
Group for consolidation.
21
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.5 Business combinations
6.6 Property, plant and equipment
6.6.1 Subsequent costs
6.6.2 Derecognition of property, plant and equipment
6.6.3 Depreciation of property, plant and equipment
The estimated useful lives are as follows:
%Freehold land NIL
Building 5
Hotel equipment 20
Office equipment, furniture and fittings 10
SPEs are entities that are created to accomplish a narrow and well-defined objective. The financial statements of
the SPE is included in the consolidated financial statements where on the substance of the relationship with the
Group and the SPE's risk and reward, the Group concludes that it controls the SPE.
Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment
losses, if any. Such cost includes the cost of replacing component parts of the property, plant and equipment and
borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of
property, plant and equipment are required to be replaced at intervals, the Company derecognises the replaced
part, and recognises the new part with its own associated useful life and depreciation. Likewise, when a major
inspection is performed, its costs is recognised in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.
Depreciation of property, plant and equipment is calculated over the depreciable amount which is the cost of an
asset or other amount substituted for cost, less its residual value. Depreciation is recognised in profit or loss on a
straight line basis over the estimated useful lives of each part of an item of property, plant and equipment, since
this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the
asset.
Class of assets
Business combinations are accounted for using the acquisition method. The consideration for acquisition is
measured at the fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the
Group in order to obtain control of the acquiree (at the date of exchange). Costs incurred in connection with the
acquisition are recognised in profit or loss as incurred. Where a business combination is achieved in stages,
previously held interests in the acquiree are re-measured to fair value at the acquisition date (date the Group
obtains control) and the resulting gain or loss, is recognised in profit or loss. Adjustments are made to fair values
to bring the accounting policies of acquired businesses into alignment with those of the Group. The costs of
integrating and reorganising acquired businesses are charged to the post acquisition profit or loss. If the initial
accounting is incomplete at the reporting date, provisional amounts are recorded. These amounts are
subsequently adjusted during the measurement period, or additional assets or liabilities are recognised when new
information about its existence is obtained during this period. Non-measurement period adjustments to contingent
consideration(s) classified as equity are not remeasured. Non-measurement period adjustments to other
contingent considerations are remeasured at fair value with changes in fair value recognised in profit or loss.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the group’s incremental borrowing
rate, being the rate at which a similar borrowing could be obtained from an independent financier under
comparable terms and conditions.
When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and the
cost of the item can be m+B479easured reliably. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are
expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in income statement in the
year the asset is derecognised.
22
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
Computer equipment 331/3
Motor vehicles 331/3
Land and assets under construction (work in progress) are not depreciated.
6.7 Intangible assets
6.7.1 Amortisation of intangible assets
6.7.2
6.7.3 De-recognition of Intangible Assets
6.7.4
6.7.5 Goodwill
6.8 Impairment of non financial assets
it is technically feasible to complete the asset for use by the Group
• the Group has the intention of completing the asset for either use or resale
• the Group has the ability to either use or sell the asset
• it is possible to estimate how the asset will generate income
• the Group has adequate financial, technical and other resources to develop and use the asset; and
• the expenditure incurred to develop the asset is measurable.
Goodwill on acquisitions comprises the excess of the aggregate of the fair value of the consideration transferred,
the fair value of any previously held interests, and the recognised value of the non-controlling interest in the
acquiree over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.
Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually.
Impairment loss is recgnized in the profit or loss account.
If no intangible asset can be recognised based on the above, then development costs are recognised in profit and
loss in the period in which they are incurred.
These comprise computer software and goodwill. Intangible assets excluding goodwill is stated at cost, less
accumulated amortisation and impairment losses, if any. Subsequent costs are included in the asset’s carrying
amount the intangible asset or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if
appropriate.
Intangible assets acquired separately are shown at historical cost less accumulated amortisation and impairment
losses.
Expenditures on research or on the research phase of an internal project are recognised as an expense when
incurred. The intangible assets arising from the development phase of an internal project are recognised if, and
only if, the following conditions apply:
The amortisation methods, useful lives and residual values of intangible assets are reviewed annually and
adjusted if appropriate.
The Group assesses annually whether there is any indication that any of its assets have been impaired. If such
indication exists, the asset's recoverable amount is estimated and compared to its carrying value. Where it is
impossible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the smallest cash-generating unit to which the asset is allocated. If the recoverable amount of an asset
(or cash-generating unit) is estimated to be less than its carrying amount an impairment loss is recognized
immediately in profit or loss, unless the asset is carried at a revalued amount, in which case the impairment loss is
recognized as revaluation decrease. Impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Intangible assets generated internally
Intangible assets excluding goodwill is amortised on a straight-line basis over the estimated useful lives of the
intangible asset. Amortisation charge is included in administrative expense in the profit or loss account. Intangible
assets with an indefinite useful life are tested for impairment annually. Intangible assets are amortised from the
date they are available for use. The useful lives is as follows:
• Computer Software - 10 years
Intangible assets are derecognised at disposal date or at the date when it is permanently withdrawn from use
without the ability to be disposed of. The difference between the carrying amount at the date of derecognition and
any disposal proceed as applicable, is recognised in profit or loss.
Intangible assets acquired separately
23
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.9 Non current assets held for sale
6.9.1 Reclassifications
6.10 Financial instruments
6.10.1 Financial assets
Amortised cost: Financial assets are measured at amortised cost where:
-
-
6.10.1 Financial assets (continued)
6.10.2 Recognition and measurement
Appropriate reclassifications are made to financial assets when the group changes its business model for
managing a financial asset.
When the use of a property changes from owner-occupier to investment property, the property is re-measured to
fair value and reclassified as investment property. Any gain arising on re-measurement is recognized in income
statement to the extent that it reverses a previous impairment loss on the specific property, with any remaining
recognized in other comprehensive income and presented in the revaluation reserve in equity. Any loss is
recognized immediately in income statement.
Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables
are carried at amortised cost using the effective interest method.
Financial assets are derecognized when the rights to receive cash flows from them have expired or where they
have been transferred and the Group has also transferred substantially all risks and rewards of ownership.
Regular-way purchases and sales of financial assets are recognized on trade-date – the date on which the Group
commits to purchase or sell the asset.
Financial assets presently held by the Group are trade receivables which are held at amortised costs.
Financial assets are initially recognized at fair value plus, in the case of all financial assets not carried at fair value
through profit or loss, transaction costs that are directly attributable to their acquisition. Financial assets carried at
fair value through profit or losses are initially recognized at fair value, and transaction costs are expensed in the
income statement.
items of property, plant and equipment (PPE) are classified as non current current assets held for sale when it is
highly probable that the item of PPE is avalaible for immediate sale in its present condition, management has
committed to the sale and the sale is expected to be completed within one year from the date of classification.
Non current assets held for sale are measured at the lower of their carrying amount and fair value less cost to sell.
Items of PPE and intangible assets classified as held for sale are not depreciated or amortised. Impairment losses
are recognised for any initial or subsequent write down of the asset to fair value less cost to sell. Gains are
recognised on any subsequent increase in fair value less cost to sell, up to the cummulative impairment loss that
has been recognised.
The Group adopts IFRS 9, Financial intsruments in the classification of its financial assets. In accordance with
IFRS 9, the classification of financial assets is based on the Group's business model for managing the financial
assets and the contractual cash flows characteristics of the asset as follows:
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Fair value through other comprehensive income: financial assets are classified and measured at fair value
through other comprehensive income where the Group's business model is both to collect contractual cash flows
and selling the financial assets when opportunities arise. The contractual cash flows are represented by principal
and interest repayments on the financial assets.
Fair value through profit or loss : any financial assets that are not held in one of the two business models
mentioned are measured at fair value through profit or loss.
Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are included in the income statement in the period in which they arise. Dividend income from financial
assets at fair value through profit or loss is recognised in the income statement as part of other income when the
Group’s right to receive payments is established. Changes in the fair value of monetary and non-monetary
securities classified as available for sale are recognised in other comprehensive income.
The Group assesses annually whether there is any indication that any of its assets have been impaired. If such
indication exists, the asset's recoverable amount is estimated and compared to its carrying value. Where it is
impossible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the smallest cash-generating unit to which the asset is allocated. If the recoverable amount of an asset
(or cash-generating unit) is estimated to be less than its carrying amount an impairment loss is recognized
immediately in profit or loss, unless the asset is carried at a revalued amount, in which case the impairment loss is
recognized as revaluation decrease. Impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity
of another entity.
The asset is held within a business model whose objective is to hold assets in order to collect contractual
cash flows.
24
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.10.3 Reclassifications
6.10.4 Impairment of financial assets
Under IFRS 9, there are two approaches to the measurement of ECL as follows:
a. General approach
b. Simplied approach
6.10.4 Impairment of financial assets (continued)
- Creating groups for trade receivables based on similar credit risks characteristics.
-
-
-
- Determination of the expected credit losses
6.10.5 Financial liabilities
For financial instruments traded in active markets, the determination of fair values of financial assets and financial
liabilities is based on quoted market prices or dealer price quotations. This includes listed equity securities and
quoted debt instruments on major exchanges.
Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading
category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the
near-term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans
and receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability
to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.
Impairment of financial assets is based on the application of the expected credit loss model (ECL) in accordance
with IFRS 9, Financial Instruments. The measurement of expected credit loss by the Group under IFRS 9 reflects
an unbiased and probability-weighted amount that is determined by evaluating the range of possible outcomes as
well as incorporating the time value of money. Also, the Group considers reasonable and supportable information
about past events, current conditions and reasonable and supportable forecasts of future economic conditions
when measuring expected credit losses. The expected credit loss is the weighted average of credit losses with the
respective risks of a default occurring as the weightings. The Group considers the risk or probability that a credit
loss occurs by considering the possibility that a credit loss occurs and the possibility that no credit loss occurs,
even if the probability of a credit loss occurring is low.
Determination of the expected loss rates for each of the groups of trade receivables created based on
established periods for whch receivables are past due.
Carry out necessary adjustments on the expected loss rates to reflect the effect of forward looking macro
economic conditions expected to exist at the reporting date.
The Group applies the simplified approach in the calculation of impairment loss on trade receivables.
The classification is determined by management at initial recognition and depends on the purpose for which the
investments were acquired.
The Group's financial liabilities at statement of financial position date include 'Borrowings' and payables (excluding
VAT and employee related payables). These financial liabilities are subsequently measured at amortised cost
using the effective interest rate method. Financial liabilities are included in current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial
position date.
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or
amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date
are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-
to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows
adjust effective interest rates prospectively.
Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are included in the income statement in the period in which they arise. Dividend income from financial
assets at fair value through profit or loss is recognised in the income statement as part of other income when the
Group’s right to receive payments is established. Changes in the fair value of monetary and non-monetary
securities classified as available for sale are recognised in other comprehensive income.
Under the general approach considerations are given to whether there has been a significant increase in credit
risks on the financial assets since initial recognition in which case an impairment loss for lifetime ECL is
recognised. Otherwise, if at the reporting date management assesses that the credit risk on the financial asset
has not increased significantly since initial recognition, impairment loss for 12 month ECL is recognised.
Significamt increase in credit risk is measured using the lifetime probability of default.
The simplied approach under the ECL model is based on a provision matrix and involves the following steps:
Collection of historical loss rates data and determining the period of applicability of the data.
25
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.10.6 Interest bearing borrowings
6.10.7 Offsetting financial instruments
6.10.8 Cash and cash equivalents
6.10.9 Non-derivative financial liabilities
6.10.10 Equity instruments
6.11 Inventories
6.12 Borrowing costs
6.13 Trade payables
6.14 Bank overdrafts and interest-bearing borrowings
Financial assets and liabilities are offset and the net amount reported in the statement of financial position only
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Borrowings, inclusive of transaction costs, are recognised initially at fair value. Borrowings are subsequently
stated at amortised costs using the effective interest rate method; any difference between proceeds and the
redemption value is recognised in the income statement over the period of the borrowing using the effective
interest rate method. Borrowings are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the statement of financial position date.
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the
weighted average principle, and includes expenditure incurred in acquiring the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition. Net realisable
value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or
expires. Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a
net basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts, and trade
and other payables. Such financial liabilities are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using
the effective interest method.
Equity instruments issued by the Group are recorded at the value of proceeds received, net of costs directly
attributable to the issue of the instruments. Shares are classified as equity when there is no obligation to transfer
cash or other assets. Incremental costs directly attributable to the issue of equity instruments are shown in equity
as a deduction from the proceeds, net of tax.
Where the Group purchases it's equity share capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Group’s
equity holders. Where such shares are subsequently sold, reissued or otherwise disposed of, any consideration
received is included in equity attributable to the Group’s equity holders, net of any directly attributable incremental
transaction costs and the related income tax effects.
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are
recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the
instrument.
Cash equivalents comprise short-term, highly liquid investments that are readily convertible into known amounts of
cash and which are subject to an insignificant risk of changes in value. An investment with a maturity of three
months or less is normally classified as being short-term.
Bank overdrafts are shown within borrowing in current liabilities.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are
incurred.
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost using the
effective interest rate method.
The Group's financial liabilities at statement of financial position date include 'Borrowings' and payables (excluding
VAT and employee related payables). These financial liabilities are subsequently measured at amortised cost
using the effective interest rate method. Financial liabilities are included in current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial
position date.
26
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.15 Employee benefits
6.15.1 Defined contribution plans
6.15.2 Defined benefit plan
6.15.2 Defined benefit plan (continued)
6.15.3 Termination benefits
6.15.4 Short-term employee benefits
6.16 Provisions, contingent liabilities and contingent assets
The surplus or deficit on the entity’s defined benefit plan is recognised in full in the statement of financial position.
Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds
and reductions in future contributions to the scheme.
Past service cost is recognised immediately to the extent that the benefits are already vested, or is amortised on a
straight-line basis over the average period until the benefits become vested. When a curtailment (reducing future
obligations as a result of a material reduction in the scheme membership or a reduction in future entitlement)
occurs, the obligation and related plan assets are re-measured using current actuarial assumptions and the
resultant gain or loss is recognised in the income statement during the period in which the curtailment occurs.
Termination benefits are recognised as an expense when the Company is committed demonstrably, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal
retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognised as an expense if the Company has made an offer
of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be
estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are
discounted to their present value.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or
profit sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of
past service provided by the employee, and the obligation can be estimated reliably.
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation.
The Group discloses a contingent liability when there is a possible obligation depending on whether some
uncertain future event occurs or when there is a present obligation, but payment is not probable and the amount
can not be estimated reliably.
The Group discloses a contingent asset where it is possible that an asset can arise from past events and the
existence will be confirmed by the ocurrence or non ocurrence of one or more future events not wholly within the
control of the entity.
Bank overdrafts and interest-bearing borrowings are recognised initially at fair value, net of transaction costs
incurred, and are subsequently measured at amortised cost using the effective interest method. The effective
interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability.
In accordance with the provisions of the amended Pension Reform Act, 2014 the Company has instituted a
Contributory Pension Scheme for its employees, where both the employees and the company contribute 8% and
10% of the employee total emoluments. The company’s contribution under the scheme is charged to the profit and
loss while employee contributions are funded through payroll deductions.
Obligations for contributions to the defined contribution pension plans are recognised as an employee benefit
expense in profit or loss in the periods during which services are rendered by employees. Contributions to a
defined contribution plan that is due more than twelve months after the end of the period in which the employees
render the service are discounted to their present value. Payments to defined contribution plans are recognised
as an expense as they fall due. Any contributions outstanding at the year end are included as an accrual in the
statement of financial position.
The terms of the defined benefit pension plan define the amount that employees will receive on retirement. These
amounts are dependent on factors such as age, years of service and compensation, and are determined
independently of the contributions payable or the investments of the scheme. The defined benefit liability
recognised on the statement of financial position is the difference between the present value of the defined benefit
obligations and the fair value of plan assets.
27
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.17 Restructuring
6.18 Revenue from contract with customers
a. Identifying the contract with a customers
b. Identifying the performance obligation in the contract
c. Determining the transaction price
d. Allocating the transaction price to the performance obligation in the contract
e.
a. The contract has been approved by the parties to the contract.
b.
c. The payment terms for the goods and services to be transferred are identifiable.
d. The contract has commercial substance.
e.
6.19 Leases
A contract is assessed to contain a lease if the following conditions are established:
- There is an identifiable asset in the contract.
-
-
-
- is not an investment property and the lessee fair values its investment properties.
-
The Group applies the 5 step model in recognising revenue from contract with customers in accordance with IFRS
15, Revenue from contract with customers which involves:
Recognising revenue when a performance obligation is satisfied by transferring a promised good or service
to a customer (which is when the customer obtains control of that good or service)
The rights and obligations of the parties to the contract in relation to the goods and services to be transferred
are identifiable.
it is probable that the consideration to which the group is entitled to in exchange for the goods or services will
The Group's revenue comprises lodging services, food and beverages sales and other services incidental to
lodging to third parties.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan,
and the restructuring either has commenced or has been announced publicly. Future operating losses are not
provided for.
The Group discloses a contingent asset where it is possible that an asset can arise from past events and the
existence will be confirmed by the ocurrence or non ocurrence of one or more future events not wholly within the
control of the entity.
Revenue from a valid contract with a customer is recognised when the following conditions are met:
A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. The Group assesses whether a contract is or contains a lease at the inception of
the contract.
Where the Group is a lessee in the lease contract, the Group recognises a right of use asset and a lease liablity at
the inception of the contract. The right of use asset is measured using the cost model provided it:
The customer has the right to obtain substantially all the economic benefits from the use of the asset
throughout the period of use.
The customer has the right to control the use of the asset throughout the period of the lease in exchange for
a consideration to the supplier.
The supplier does not have a sunstantive right to substitute the use of the asset throughout the period of use
of the asset.
does not relate to a class of propety, plant and equipment to which the lessee applies revaluation model, in
which case all right-of-use assets relating to that class of property, plant and equipment can be revalued.
Under the cost model a right-of-use asset is measured at cost less accumulated depreciation and accumulated
impairment.
Where the lease is for a term of 12 months or less and containing no purchase options or the underlying asset
has a low value when new such as personal computers or small items of office furniture, the Group accounts for
lease payments as an expenses on a straight line basis over the term of the lease except another systematic
basis is more reflective of the economic benefits obtainable from utilisation of the leased asset.
The right of use asset and the lease liability are initially measured at the present value of the lease payments
payable over the lease term by discounting with the implicit rate of the lease. Where the implicit rate can not be
readility determined, the Group shall apply its incremental borrowing rate.
Management has opted to exempt rental payments for its office as they are of a short term nature and not
considered material. Also the Group has not entered into any lease contract where it is the lessor.
28
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.20 Investment return
6.21 Dividend distributions
6.22 Unclaimed dividend
6.23 Related parties
The Group designates an entity or a person a related party where it has identified that:
-
-
6.23 Related parties (continued)
- The Group is controlled by the entity or person.
- The entity or the person has significant influence over the Group.
- The person is a key management personnel of the Group.
-
The Group discloses transactions with related parties which includes the:
- The name of the related party.
- Nature of transaction with the related party.
- Amount of the transaction with the related party nature of transaction with the related party.
- Balance due from and to the related party at the end of the reporting period
The Group discloses the following information regarding key management personnel
- Short term employee benefits
- Post employment benefit
6.24 Taxation
6.25 Deferred tax
Final dividend distributions to the company's shareholders are only recognised as a liability in the subsequent
reporting period following when it has been approved bu the shareholders at the Annual General Meeting.
Unclaimed dividends are amounts payable to shareholders in respect of dividend previously declared by the
Group, which have remained unclaimed by the shareholders. In compliance with Section 385 of the Companies
and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria, unclaimed dividends after twelve years are
transferred to retained earnings.
Investment return comprises of dividend, interest and rent receivable, movement in amortized cost on debt
securities and other loan and receivables, realized gains and losses, and unrealized gains and losses on fair
value assets. Dividends on ordinary shares are appropriated from revenue reserve in the period they are
approved by the Group’s Shareholders.
Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax
bases of assets and liabilities shown on the statement of financial position. Deferred tax assets and liabilities are
not recognised if they arise in the following situations: the initial recognition of goodwill; or the initial recognition of
assets and liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based
on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the statement of financial position date.
The Group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated
with investments in subsidiaries, joint ventures and associates where the parent company is able to control of the
timing of the reversal of the temporary differences and it is not considered probable that the temporary differences
will reverse in the foreseeable future. It is the Group’s policy to reinvest undistributed profits arising in group
companies.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. The carrying amount of the deferred tax assets are reviewed at each
statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same tax authority. Current tax assets and
Income tax for the period is based on the taxable income for the year. Taxable income differs from profit as
reported in the statement of comprehensive income for the period as there are some items which may never be
taxable or deductible for tax and other items which may be deductible or taxable in other periods. Income tax for
the period is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
The entity and the Group are members of the same group. Holding company and subsidiary relationship.
The entity is a joint venture or associate of the Group or the entity is a joint venture or associate of another
member of the Group.
The entity is a post-employment defined benefit plan for the benefit of employees of either the reporting entity
or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers
are also related to the reporting entity.
29
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
6.26 Earnings per share
6.27 Share capital
6.28 Segment Reporting
6.29 Finance income and finance costs6.29.1 Finance income
6.29.2 Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, dividends on
preference shares classified as liabilities, changes in the fair value of financial assets at fair value through profit or
Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-
for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, and gains
on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in
consolidated income statement using the effective interest method.
The Group presents basic earnings per share for its ordinary shares. Basic earnings per share are calculated by
dividing the profit attributable to ordinary shareholders of the Group by the number of shares outstanding during
the year. Adjusted earnings per share is determined by dividing the profit or loss attributable to ordinary
shareholders by the weighted average number of ordinary shareholders adjusted for the bonus shares issued.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The Board of Directors is the chief operating decision makers and is responsible for assessing
the financial performance and position of the group, and make strategic decisions. The Group identifies and
segregates reportable segments based on their geographical location. These are components of the Group
operating within a particular operating environment that are subject to risks and returns that are different from
components operating in another economic environment.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and
share options are recognised as a deduction from equity, net of any tax effects and costs directly attributable to
the issue of the instruments.
Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax
bases of assets and liabilities shown on the statement of financial position. Deferred tax assets and liabilities are
not recognised if they arise in the following situations: the initial recognition of goodwill; or the initial recognition of
assets and liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based
on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the statement of financial position date.
The Group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated
with investments in subsidiaries, joint ventures and associates where the parent company is able to control of the
timing of the reversal of the temporary differences and it is not considered probable that the temporary differences
will reverse in the foreseeable future. It is the Group’s policy to reinvest undistributed profits arising in group
companies.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. The carrying amount of the deferred tax assets are reviewed at each
statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same tax authority. Current tax assets and
30
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
7. Property, plant and equipment
Office
equipment
Land Building
Hotel
equipment
furniture
and fittings
Computer
equipment
Motor
vehicles Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
7.1 The Group
Cost
At 1 January 2018 3,440,742 1,688,230 4,638,334 3,512,426 224,594 290,844 13,795,170
Additions in the year - 19,777 194,573 109,705 127,855 - 451,910 Reclassification - - - - - - -
Disposals during the year - - (2,100) - - - (2,100)
At 31 December 2018 3,440,742 1,708,007 4,830,807 3,622,131 352,449 290,844 14,244,980
At 1 January 2019 3,440,742 1,708,007 4,830,807 3,622,131 352,449 290,844 14,244,980
Additions in the year - 75,568 228,544 210,810 25,419 12,600 552,941
Disposals during the year - - (81,347) - - (4,990) (86,337)
Transfer from work in progress 3,966,491 286,397 8,945 14,311 - 4,276,144
At 31 December 2019 3,440,742 5,750,066 5,264,401 3,841,886 392,179 298,454 18,987,728
Depreciation
At 1 January 2018 - 785,812 3,544,387 2,772,602 187,746 273,976 7,564,523
Charge for the year - 37,363 412,229 235,166 34,017 12,266 731,041
At 31 December 2018 - 823,175 3,956,616 3,007,768 221,763 286,242 8,295,564
Depreciation
At 1 January 2019 - 823,175 3,956,616 3,007,768 221,763 286,242 8,295,564
Charge for the year - 153,714 375,474 222,141 59,782 6,372 817,483
Eliminated on disposal - - (71,057) - - (4,990) (76,047)
At 31 December 2019 - 976,889 4,261,033 3,229,909 281,545 287,624 9,037,000
Carrying amount
At 31 December 2019 3,440,742 4,773,177 1,003,368 611,977 110,634 10,830 9,950,728
At 31 December 2018 3,440,742 884,832 874,191 614,363 130,686 4,602 5,949,416
32
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
Office
Furniture Motor
Land Building
Hotel
equipment
fittings and
equipment
computer
equipment vehicles Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
7.2 The Company
Cost
At 1 January 2018 3,084,350 765,570 2,403,608 79,031 222,942 54,425 6,609,926
Additions - 11,381 118,116 5,844 127,855 - 263,196
Disposals during the year - - (2,100) - - - (2,100)
At 31 December 2018 3,084,350 776,951 2,519,624 84,875 350,797 54,425 6,871,022
At 1 January 2019 3,084,350 776,951 2,519,624 84,875 350,797 54,425 6,871,022
Additions in the year - 41,858 228,544 2,443 25,419 12,600 310,864
Transfer from work in progress - 3,966,491 286,397 8,945 14,311 - 4,276,144
Disposals during the year - - (81,347) - - (4,990) (86,337)
At 31 December 2019 3,084,350 4,785,300 2,953,218 96,263 390,527 62,035 11,371,693
Depreciation
At 1 January 2018 - 489,008 1,846,481 62,506 186,094 49,263 2,633,352
Charge for the year - 29,920 276,078 3,848 34,017 5,162 349,025
Eliminated on disposal - - - - - - -
At 31 December 2018 - 518,928 2,122,559 66,354 220,111 54,425 2,982,377
At 1 January 2019 - 518,928 2,122,559 66,354 220,111 54,425 2,982,377
Charge for the year - 130,269 193,812 4,356 59,782 1,769 389,988
Eliminated on disposal - - (71,057) - - (4,990) (76,047)
At 31 December 2019 - 649,197 2,245,314 70,710 279,893 51,204 3,296,318
Carrying amount
At 31 December 2019 3,084,350 4,136,103 707,904 25,553 110,634 10,831 8,075,375
At 31 December 2018 3,084,350 258,023 397,065 18,521 130,686 - 3,888,645
33
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018
N'000 N'000 N'000 N'000
8. Investment Property 4,630,087 4,630,087 - -
9. Capital work in progress
At 1 January 6,529,985 6,320,396 4,238,336 4,111,841
Additions in the year 1,962,193 209,589 51,254 126,495
Reclassification to Property plants & equipments (4,276,144) - (4,276,144) -
At 31 December 4,216,034 6,529,985 13,446 4,238,336
2019 2018 2019 2018
N'000 N'000 N'000 N'000
10. Intangible asset
10.1 Computer software
Cost
At 1 January 70,087 69,253 21,070 20,236
Additions in the year 201,875 834 - 834
At 31 December 271,962 70,087 21,070 21,070
Amortization
At 1 January 34,991 20,973 12,075 10,051
Charge for the year 70,256 14,018 2,858 2,024
At 31 December 105,247 34,991 14,933 12,075
Carrying amount 166,715 35,096 6,137 8,995
10.2 Goodwill 4,452,668 4,452,668 - -
4,619,383 4,487,764 6,137 8,995
The Group The Company
The Group The Company
The Group
Investment property disclosed in the group financial
statements relates to its subsidiary, Charles Hampton &
Company Limited in which it has 89.9% interest and The
property comprise land held for future development.
Investment property is measured using the fair value
model.
The revaluation surplus arising therefrom is recognised
group retained earnings.
This represents on going renovation work on the Group's
property.
Goodwill arises from the consolidation of the financial statements of Capital Hotel Plc with Ikeja Hotel Plc. It
represents the excess of the cost of acquiring interest in Capital Hotel Plc over the fair value of its identifiable net
assets. Interest in Capital Hotel was acquired indirectly through the Company's 75% interest in Hans Gremlin Nigeria
Limited, which has 51% interest in Capital Hotels Plc. In assessing goodwill for impairment, management considered
the future outlook of the identified cash generating Unit (CGU), Capital Hotel Plc from which the goodwill arose in
addition to its current market capitalisation. Capital Hotel Plc is the owner of Sheraton Abuja Hotel (SAH), the revenue
generating operation of the Company. SAH presently has a guest room capacity of 575 out of which 266 are
undergoing renovation and upgrading to state of the art club rooms and suites. The Company projects to make 97
rooms out 266 undergoing renovation available for guest use in the year 2020. The strategic renovation/upgrading is
expected to significantly grow revenues and profits, boost market share and enhance customer loyalty and increase
shareholders' value. Based on these strategic initiatives, management has assessed that the carrying amount of
goodwill has not been impaired.
34
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018
N'000 N'000
11. Investment in subsidiaries
Hans Gremlin Nigeria Limited 4,440,919 4,440,919
IHL Services Limited 100 100
Charles Hampton and Company Limited 3,499 3,499
4,444,518 4,444,518
11.1 Subsidiaries undertakings
All shares in subsidiaries undertakings are ordinary shares
Country of
incorporati● Hans Gremlin Nigeria Limited Nigeria 75% Special purpose vehicle.
● Capital Hotels Plc Nigeria 38.25%
● IHL Services Limited Nigeria 100%
● Charles Hampton Nigeria 89.9%
11.2 The summary of the operational results of the subsidiary companies are as follows:
Hans-
Gremlin
Nigeria
Limited
Capital
Hotel Plc
IHL
Services
Limited
Charles
Hampton
and
Company
Limited
N'000 N'000 N'000 N'000
31 December 2019
Revenue from contract with customers 39,494 5,188,276 3,355 851
(Loss)/profit after tax 70,104 401,775 2,827 (7,119)
Total assets 6,334,272 9,900,732 1,016,728 5,103,473
Total liabilities 513,544 3,159,413 47,987 831,036
Equity 5,820,727 6,741,319 968,741 4,272,437
Revenue 39,494 5,977,436 - -
Profit /(Loss)after tax (735) 379,946 (2,033) (22,870)
Total assets 6,334,272 10,076,821 1,036,833 5,103,115
Total liabilities 583,648 3,659,838 71,399 706,856
Equity 5,750,623 6,416,983 965,434 4,396,259
12. Investment accounted for using the equity method
12. Investment accounted for using the equity method (continued)
Aggregate amounts relating to investment in joint associate company include:
The Company holds 75% of the issued share capital of Hans Gremlin Nigeria Limited, a special purpose vehicle used
in acquring 51% of the issued share capital of Capital Hotels Plc.
Principal activities
Advisory and consultancy services to
undertake advisory management on all
types of businesses.
31 December 2018
The Company holds 12.18% interest in Tourist Company of Nigeria (TCN). The terms of the contractual arrangement
confers on Ikeja Hotel Plc the right to participate in the strategic operating and financial decisions of TCN, making
TCN an associate company of Ikeja Hotel Plc. Therefore, Ikeja Hotel Plc's investment in TCN is accounted for using
the equity method.
To Carry on Business as an Investment
company amongst others
SubsidiariesProportion
of ownership
Operation of hotels and restaurants,
apartment letting, recreational facilities,
night clubs and a business center.
35
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018
N'000 N'000 N'000 N'000
At 1 January 147,014 315,023 798,722 798,722
Group's share of loss of the associate company (147,014) (168,009) - -
At 31 December - 147,014 798,722 798,722
2019 2018 2019 2018
N'000 N'000 N'000 N'000
13. Investment in unquoted entities
ICON Stockbroker 7,421 7,421 - -
A. Savoia Ltd 2,571 2,571 - -
Felfan 13,005 13,005 - -
22,997 22,997 - -
Impairment allowance (22,997) (22,997) - -
- - - -
14. Inventory WIP
Food and Beverage 93,068 120,847 42,238 55,333
Maintenance supplies 18,161 76,476 18,161 -
Operating supplies 70,317 - 70,317 -
Inventory WIP 472,979 472,979 - -
654,525 670,302 130,716 55,333
15. Trade receivables
Trade receivables 1,341,017 1,255,620 970,637 727,783
Allowances for impairment losses (90,244) (190,354) (7,948) (16,201)
Net trade receivables 1,250,773 1,065,266 962,689 711,582
15.1
At 1 January 190,354 273,493 16,201 79,373
Charge for the year 25,690 - 6,295 -
Write back of impairment allowance (125,800) (83,139) (14,548) (63,172)
90,244 190,354 7,948 16,201
2019 2018 2019 2018
N'000 N'000 N'000 N'000
16. Other receivables and prepayments
Withholding tax receivable 487,486 913,149 370,883 627,429
Advances to suppliers 239,483 311,738 141,960 111,143
Advances to employees 47,328 40,624 3,696 3,931
Prepayments (Note 17.1) 53,010 210,837 26,659 17,383
827,307 1,476,348 543,198 759,886
2019 2018 2019 2018
N'000 N'000 N'000 N'000
16.1 Prepayments
P/PM PC's Software 12,912 11,160 12,912 11,160
The Group The Company
The Group The Company
The Group The Company
Trade and other receivables are stated at their original invoiced value as the interest that would be recognised from
discounting future cash receipts over the short period is not considered to be material.
Movement in impairment allowance for trade
receivales:
Additionl impairment allowance is recognized in cost of sales. Write back of impairment allowance is recognized in
other income (31 December 2018: cost of sales).Further notes on trade receivables impairments are shown on note
47.6.
The Group The Company
As at the reporting dates, the carrying amount of the
inventory were at cost and were lower than their net
realisable values. There was no impairment of inventory at
31 December 2019 (2018: Nil).
36
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
Rent 2,569 1,809 2,569 1,809
Maintenance 7,891 14,035 - -
Dues and subscription 2,342 2,343 2,342 2,343
Insurance 6,936 255 6,936 255
Supplies 9,316 144,662 - -
Staff benefits 9,144 30,752 - -
Intranet resources 1,900 5,821 1,900 1,816
53,010 210,837 26,659 17,383
17. Loan to related party
2019 2019 2018 2019 2019 2018
US $'000 N'000 N'000 US $'000 N'000 N'000
At 1 January 17,882 6,455,477 6,151,565 17,882 6,455,477 6,151,565
Interest capitalised 822 296,823 303,912 822 296,823 303,912
Exchange revaluation - - - - - -
At 31 December 18,704 6,752,300 6,455,477 18,704 6,752,300 6,455,477
Terms of the above loan:
a) They are unsecured.
b)
c) The loan is denonminated in US Dollar.
d) Interest is capitalised at 5% per annum.
2019 2018 2019 2018
N'000 N'000 N'000 N'000
18. Amount due from related parties
Hans Gremlin Nigeria Limited - - 486,048 485,313
Charles Hampton Limited - - 247,499 237,516
AVIS - Current Account 31,122 31,122 - -
GMI & Co 113,188 113,188 - -
Felfan Limited 59,074 59,074 - -
203,384 203,384 733,547 722,829
Impairment allowance (Note 15.1) (90,196) (90,196) - -
113,188 113,188 733,547 722,829
18.1
18.2
18.3 Impairment Allowance
At 1 January 90,196 198,667 - -
Write back during the year - (108,471) - -
At 31 December 90,196 90,196 -
The Company
Prior year's write back of impairment allowance is included in "provision no longer required" amount of N185.6 million
disclosed in other income.
This amount represent balance in AVIS- Current account and Felfan without movement for the past three years and
have been fully impaired.
The carrying amount of receivables from related party represents their fair value at the reporting date.
The Company
Loan to related party relates to receivable from The Tourist Company of Nigeria Plc. The interest rate of 5% (2018 :
5%) has been set on the Company's fixed borrowing. Of these fixed borrowings 100% (2018 : 100%) is for periods
longer than 12 months. The Company had no unutilised borrowing facilities at 31 December 2019 (2018 : Nil).
Repayment is subject to the board of director's discretion, taking into account the availability of funds and the
company's working capital requirements.
The Group
The Group
37
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018
N'000 N'000 N'000 N'000
19. Cash and cash equivalents
Cash in hand 2,507 918 1,836 335
Cash at bank 3,083,908 2,760,408 1,734,530 2,312,561
3,086,415 2,761,326 1,736,366 2,312,896
Fixed deposits (Note 19.1) 2,570,035 3,530,997 1,488,451 211,891
5,656,450 6,292,323 3,224,817 2,524,787
19.1 Fixed deposits
This are placements with banks in Nigeria 2,570,035 3,530,997 1,488,451 211,891
20. Trade and other payables
Trade payables 811,611 1,193,288 335,512 468,677
Accrued expenses 1,185,350 810,390 612,435 366,939
CHP Hospitality and Tourism Limited 617,013 625,254 - -
Advance deposits 453,961 640,156 164,087 252,141
16,170 9,424 16,170 9,424
Service charge distribution 77,454 43,327 51,334 43,327
VAT Payable 363,537 347,849 22,981 16,892
Unclaimed dividend (Note 20.1) 51,879 51,879 51,879 51,879
Other sundry creditors (Note 20.2) 112,018 332,739 25,260 42,823
3,688,993 4,054,306 1,279,658 1,252,102
20.1
20.2
21. Deferred income
At 1 January 5,259,561 4,978,414 5,085,665 4,781,753
Additions during the year 447,024 449,166 296,823 303,912
Recognized in profit or loss account (133,672) (168,019) - -
At 31 December 5,572,913 5,259,561 5,382,488 5,085,665
21.1 Deferred income comprise
Ikeja Hotel (Note 21.2) 5,382,488 5,085,665 5,382,488 5,085,665
Capital Hotel (Note 22.2) 48,170 31,641 - -
Charles Hampton 142,255 142,255 - -
5,572,913 5,259,561 5,382,488 5,085,665
21.2
22. Dividend payable
This amount represents total unclaimed dividend
returned by registrar.
This amount represent credit balance in trade
receivables, outstanding consumption tax and other
account payables.
The carrying value of accounts payable and accruals
approximate their fair value.
This relates to interest receivable from the loan
granted to Tourist Company of Nigeria Plc, which are
payable based on the Company's liquidity.
The Group The Company
Cash and cash equivalents consists of cash on hand,
balances and fixed deposits with banks.
Due to Starwood Eame License and Service
Company
38
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
At 1 January 109,845 109,845 16,691 16,691
Declared during the year 110,183 47,819 - -
Payment during the year (110,183) (47,819) - -
At 31 December 109,845 109,845 16,691 16,691
23. Amount due to related parties
Capital Hotels Plc - - 589,514 763,713
IHL Services Limited - - 784,760 784,760
Federal Palace/Sun International 4,247 4,247 4,247 4,247
3,468,880 3,097,221 3,468,880 3,097,221
Minabo Limited (Note 23.2) 2,028,881 1,811,501 2,028,881 1,811,501
1,538,844 1,373,967 1,538,844 1,373,967
7,040,852 6,286,936 8,415,126 7,835,409
23.1 Movement in amount due to related parties is as follows:
At 1 January 6,286,936 5,613,549 7,835,409 7,155,293
interest accrued during the year 753,916 673,387 778,020 717,026
Repayments during the year - - (198,303) (36,910)
7,040,852 6,286,936 8,415,126 7,835,409
23.2
2019 2018 2019 2018
24. Taxation N'000 N'000 N'000 N'000
24.1 Current tax payables
At 1 January 617,083 440,748 306,151 142,934
Payment in the year (516,929) (262,948) (369,540) (27,398)
Charge for the year (Note 23.3) 376,870 439,283 128,600 190,615
(Over)/under provision (7,450) - 63,389 -
At 31 December 469,574 617,083 128,600 306,151
24.2. Deferred taxation
At 1 January 611,127 926,690 188,252 228,628
Charge for the year (Note 25.3) (57,286) (315,563) (53,637) (40,376)
At 31 December 553,841 611,127 134,615 188,252
2019 2018 2019 2018
24.3 Income tax expense N'000 N'000 N'000 N'000
Income tax 332,459 280,326 107,167 173,978
The balances comprise outstandIng loans to related parties. The terms of these balances were mutually agreed
but not formally documented and executed. Interest at 12% per annum are compounded annually on the
outstanding loan balances. Repayment of both interest and principal is based on the liquidity position of the
Company. No payment of either principal or interest has been made. With the conclusion of the Securities &
Exchange Commission (SEC) instituted forensic audit, the Board expects a resolution to all legacy issues around
these balances.
The Group The Company
The charge for taxation has been computed in
accordance with the provisions of the Companies
Income Tax Act, CAP C21, LFN 2004 and the
Education Tax Act, CAP E4, LFN 2004 as amended.
Divided paid during the year comprise interim
dividend of N62.364 million paid by Ikeja Hotel Plc
and N47.819 million paid by Capital Hotels Plc to non
controlling interests.
Alurum Investment Ltd/Omamo Trust Limited (Note
23.2)
Associated Ventures International Limited (Note
23.2)
The Group The Company
39
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
Education tax 44,411 30,919 21,433 16,637
376,870 311,245 128,600 190,615
Prior years (over)/underprovision (7,450) 128,038 63,389 -
369,420 439,283 191,989 190,615
Deferred taxation (57,286) (315,563) (53,637) (40,376)
312,134 123,720 138,352 150,239
24.4
Profit/(loss) before tax 1,147,080 1,229,079 679,468 827,273
Tax @ 30% 408,099 368,724 203,841 248,183
Net deductible items 1,043,445 391,044 617,771 185,909
Balancing charge - 18,267 - 13,118
Capital allowance utilised (1,112,394) (369,671) (714,445) (273,231)
Education tax 44,411 30,919 21,433 16,637
Prior years (over)/underprovision (7,450) - 63,389 -
Effect of non taxable profits of subsidiaries (10,340) - - -
Deferred tax effect (53,637) (315,563) (53,637) (40,376)
Income tax recognised in the profit or loss account 312,134 123,720 138,352 150,239
25. Retirement benefit obligation
i
ii
2019 2018 2019 2018
N'000 N'000 N'000 N'000
Defined contribution plan (Note 25.1) - - - -
Defined benefit plan (Note 25.2) 1,770,575 2,334,784 1,457,105 1,728,301
1,770,575 2,334,784 1,457,105 1,728,301
25.1 Defined contribution plan
At 1 January - - - -
Contribution in the year 147,007 163,538 84,754 73,336
Remittance during the year (147,007) (163,538) (84,754) (73,336)
At 31 December - - - -
25.2 The defined benefit plan is further analysed into:
Active plan 1,386,217 1,633,014 1,386,217 1,633,014
Terminated plan 384,358 701,770 70,888 95,287
1,770,575 2,334,784 1,457,105 1,728,301
2019 2018 2019 2018
N'000 N'000 N'000 N'000
25.3 Movement in defined benefit plan
Active defined benefit obligations
The Group The Company
The tax expense for the year is reconciled to the
profit/(loss) for the year as follows:
The Company complies with the provisions of the Pension Reform Act 2014 whereby both employer and
employees contributed 10% and 8% each of employee gross emolument on monthly basis. Both employer and
employee contributions are remitted monthly to the employees' chosen Pension Fund Administrators (PFA).
Employer contribution has been charged to the statement of profit or loss and other comprehensive income.
Under the defined benefit's scheme member's past service benefits have been assessed using the Projected
Unit Credit Method (PUCM). This method calculates the actuarial liability (staff gratuity benefits and long service
grants) as the discounted value of the benefits that have accrued over the past period of membership of the
beneficiaries. In determining this value allowance is made for any future expected inflationary growth of the on-
going benefits up to the exit date.
The Group The Company
40
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
At 1 January 1,633,014 1,488,404 1,633,014 1,488,404
Current service cost 145,977 163,138 145,977 163,138
Interest cost 174,379 173,343 174,379 173,343
Payments in the year (371,262) (90,320) (371,262) (90,320)
Provision written back - (101,551) - (101,551)
Re-measurement gain on defined benefit plan (195,891) - (195,891) -
At 31 December 1,386,217 1,633,014 1,386,217 1,633,014
Present value of defined benefit obligation 1,386,217 1,633,014 1,386,217 1,633,014
Fair value of plan assets - - - -
Terminated obligations
At 1 January 701,770 1,046,484 95,287 150,287
Payments in the year (317,412) (344,714) (24,399) (55,000)
At 31 December 384,358 701,770 70,888 95,287
25.4 Assumptions applied in the estimates:
Discount rate 10.71% 10.71% 10.71% 10.71%
Net return on investment 12.00% 12.00% 12.00% 12.00%
Future salary increases 10.00% 10.00% 10.00% 10.00%
26. Share capital
26.1 Authorised
4,000,000,000 Ordinary shares of 50 kobo each 2,000,000 2,000,000 2,000,000 2,000,000
26.2 Issued and fully paid
2,078,796,399 ordinary shares of 50 kobo each 1,039,398 1,039,398 1,039,398 1,039,398
27. Share premium
At 31 December 1,381,072 1,381,072 1,381,072 1,381,072
The weighted average of the following indices formed part of the actuarial assumptions used at 31 December
2019
The actuarial valuation report was signed on 13 February 2020 by I. A. Abraham (FRC/2016/NAS/00000015764)
for B. A. Adigun & Associates.
The terminated obligations is in respect of the gratuity scheme which have been discontinued based on
agreements with the Group's workers union. Settlements of the outstanding balances at termination are made in
accordance with terms contained in the agreement with the workers union.
Defined benefit scheme are based upon independent actuarial valuation performed by B.A. Adigun and
Associates using the projected unit credit basis. This valuation was carried out as at 31 December 2019. Defined
benefit schemes expense is recognised in administrative expenses in the statement of profit or loss and other
comprehensive income.
Assumptions regarding future mortality experiences are set based on actuarial advices, published statistics and
experience in a given jurisdiction. The Projected Unit Credit Method (PUCM) was applied to determine the
present value of the Company's defined benefit obligations and the related current service cost and where
applicable the past service costs in accordance with Guidance Note (GN 9) issued by the Institute and Faculty of
Actuaries.
41
IKEJA HOTEL PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018N'000 N'000 N'000 N'000
28. Retained earningsAt 1 January 11,673,832 10,909,841 5,682,469 5,005,435
Profit attributable to the owners of the company 570,042 763,991 541,116 677,034 Re-measurement gain/(loss) on defined benefit plan 195,891 - 195,891 - Dividend paid (110,183) - (62,364) -
At 31 December 12,329,582 11,673,832 6,357,112 5,682,469
28.1
2019 2018 2019 2018
N'000 N'000 N'000 N'000
29. Non controlling interestAt 1 January 4,355,626 4,014,257 - -
Share of profit or loss 264,904 341,369 - -
At 31 December 4,620,530 4,355,626 - -
30. Revenue from contracts with customers
Revenue comprise
Room sales 7,790,599 7,822,852 5,174,457 5,164,481
Food and beverage 4,153,450 4,277,018 2,114,192 2,011,984
Other minor operating departments 571,511 1,126,699 38,635 72,668
12,515,560 13,226,569 7,327,284 7,249,133
30.1 Timing of revenue recognition
Goods transferred at a point in time 4,153,450 4,277,018 2,114,192 2,011,984
Services transferred over time 8,362,110 8,949,551 5,213,092 5,237,149
Total revenue from contracts with customers 12,515,560 13,226,569 7,327,284 7,249,133
2019 2018 2019 2018
N'000 N'000 N'000 N'000
Revenue
External customer 12,515,560 13,226,569 7,327,284 7,249,133
Total Revenue from contracts with customers 12,515,560 13,226,569 7,327,284 7,249,133
30.2 Contract assets
Trade recievables (Note 17)
31. Segment information
The Group The Company
Revenue is recognised overtime for services transferred because as the Company performs, the customer simultaneously
receives and consumes the benefits provided by the Company's performance.
There is no other revenue items outside IFRS 15. Set out below, is the reconciliation of the revenue from contracts with
customers with the amounts disclosed in the segment information (Note 30).
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. Expected credit losses on trade
receivables as at 31 December 2019 were N90.244 million and N7.948 for the Group and Company respectively (31
December 2018: N190.354 million and N16.201 million respectively.
At a meeting of the Directors of Ikeja Hotel Plc held on 19 July .2019, It was resolved to pay an interim dividend of 3k per
share amounting to N62.364 Million (2018: Nill) out of retained earnings. The dividend was paid to members after deduction
of withholding tax at the approved rate. The dividend payment would be ratified by the shareholders at the Annual General
Meeting. Included in dividend paid is the portion of dividend paid by Capital Hotels Plc to shareholders who are not members
of the group (non controlling interests) amounting to N47.819 million.
The Directors proposed a final dividend of 2k per share amounting to N41.576 million. The dividend proposed is subject to
approval by the shareholders at the Annual General Meeting and has not been included as a liability in these group financial
statements.
The Group The Company
The Group The Company
42
IKEJA HOTEL PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 201931.1 Reportable segments
The two reportable segments are:
Lagos and;
Abuja
31.2 Segmented financial information
2019 Lagos Abuja Eliminations Total
N'000 N'000 N'000 N'000
Segmented results
Revenue 7,327,284 5,188,276 - 12,515,560
Profit before tax 527,430 646,394 (26,744) 1,147,080
Income tax (67,513) (244,621) - (312,134)
Profit for the year 459,917 401,773 (26,744) 834,946
Segmented assets and liabilities
Non current assets
Investment in subsidiaries 10,778,790 - (10,778,790) -
Investment in associate 798,722 - (798,722) -
Other non current assets 21,104,808 6,852,023 2,324,891 30,281,722
32,682,320 6,852,023 (9,252,621) 30,281,722
Current assets 5,340,350 3,048,705 - 8,389,055
38,022,671 9,900,728 (9,252,621) 38,670,777
Non current liabilities 10,760,349 732,696 (2,127,777) 9,365,268
Current liabilities 7,361,200 2,426,717 - 9,787,917
18,121,549 3,159,413 (2,127,777) 19,153,185
2018 Lagos Abuja Eliminations Total
N'000 N'000 N'000 N'000
Segmented results
Revenue 7,249,133 5,977,436 - 13,226,569
Profit before tax 742,097 513,726 (26,744) 1,229,079
Income tax (178,160) 54,440 - (123,720)
Profit for the year 563,937 568,166 (26,744) 1,105,359
Segmented assets and liabilities
Non current assets
Investment in subsidiaries 10,778,790 - (10,778,790) -
Investment in associate 798,722 - (651,708) 147,014
Other non current assets 20,852,947 5,128,786 2,184,185 28,165,918
32,430,459 5,128,786 (9,246,313) 28,312,932
Current assets 4,550,264 4,953,976 - 9,504,240
36,980,723 10,082,762 (9,246,313) 37,817,172
Non current liabilities 10,471,972 1,029,358 (2,268,483) 9,232,847
Current liabilities 7,503,915 2,630,478 - 10,134,393
17,975,887 3,659,836 (2,268,483) 19,367,240
31. Segmented financial information (continued)
Notes
With regards the year ended 31 December 2019 the eliminations consist of:
The Board of Directors is the Chief Operating Decision Maker (CODM) for reviewing the operating results of reportable
segments and making decisions regarding allocation of resources to the segments. The Group identifies and segregates
reportable segments based on their geographical location. These are components of the Group operating within a particular
operating environment that are subject to risks and returns that are different from components operating in another economic
environment.
Below are financial information relating to the performance, assets and liabilities of the reportable segments. Performance of
each segment is measured based on the sales revenue, operating profit before finance cost and tax and profit after tax.
43
IKEJA HOTEL PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
(iv) Non current liabilities - N2.128 billion: elimination of non current intercompany balances.
(vi) Profit or loss account - N26.744 million: elimination of group's share of intercompany dividend.
With regards the year ended 31 December 2018 the eliminations consist of:
(iv) Non current liabilities - N2.268 billion: elimination of non current intercompany balances.
(vi) Profit or loss account - N26.744 million: elimination of group's share of intercompany dividend.
2019 2018 2019 2018
N'000 N'000 N'000 N'000
32. Cost of sales
Rooms 1,335,560 3,198,375 1,039,106 1,032,689
Food and beverage 2,210,802 2,485,615 1,623,338 1,516,173
Operating overheads 5,391,513 3,856,484 2,143,274 2,121,880
8,937,875 9,540,474 4,805,718 4,670,742
Gross profit 3,577,685 3,686,095 2,521,566 2,578,391
Gross profit margin (%) 29 28 34 36
2,138,338 3,113,415 1,162,896 1,248,913
33. Other incomeExchange gain 291,911 55,487 - 12,583 Fee income 4,089 427 - - Sundry receipt - 3,731 - - Sales of scrap 9,399 14,144 9,399 6,838 Insurance claim - 26,763 - 26,763 Profit on disposal of property, plant & equipment 9,750 - 9,750 - Provision no longer required 125,800 185,604 14,549 70,992
440,949 286,156 33,698 117,176
2019 2018 2019 2018
34. Expenses
34.1 Sales and marketing expenses N'000 N'000 N'000 N'000
Salaries 67,641 61,903 67,641 61,903
Staff welfare 11,669 10,553 11,669 10,553
Loyalty Programs 69,927 62,191 69,927 62,191
The Group The Company
The Group The Company
(i) Investment in subsidiaries - N10.779 billion: elimination of the company's investments in subsidiary companies against the
proportion of its interests in the net assets of the subsidiaries.
(ii) Investment in associates - N798 million: adjustment for cummulative share of loss of the company in the net losses of its
associate company.
(iii) Other non current assets - N2.325 billion: being the net of the goodwill amount of N4.453 billion created on elimination of
the Company's investments in subsidiaries and elimination of non current intercompany balances of N2.128 billion from the
group.
(i) Investment in subsidiaries - N10.779 billion: elimination of the company's investments in subsidiary companies against the
proportion of its interests in the net assets of the subsidiaries.
(ii) Investment in associates - N652 million: adjustment for cummulative share of loss of the company in the net losses of its
associate company.
(iii) Other non current assets - N2.184 billion: being the net of the goodwill amount of N4.453 billion created on elimination of
the Company's investments in subsidiaries and elimination of non current intercompany balances of N2.268 billion from the
group.
Included in group cost of sales are salaries and wages and
pension cost of N2.059 billion and N147.007 million
respectively (2018: N3.012 billion and N163.538 million
respectively. Included in the Company's cost of sales are
salaries and wages and pension cost of N1.146 billion and
N84.754 million respectively (31 December 2018: N1.237
billion and N73.336 million respectively).
44
IKEJA HOTEL PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Dues and Subscription 7,269 5,100 7,269 5,100
Travel - Other 15,702 11,301 15,702 11,301
Entertainment 5,752 4,150 5,752 4,150
Advertisement and publicity 103,910 81,386 103,910 81,386
281,870 236,584 281,870 236,584
34.2 Expenses by nature (Administrative expenses)
Directors' remuneration 10,570 10,780 8,700 8,910 Directors' Expenses 85,940 108,270 60,390 82,384 Employee costs 146,243 134,761 95,838 79,360 Depreciation of property, plant and equipment 817,483 731,042 389,988 349,026 Amortisation of intangible assets 70,256 14,018 2,858 2,024 Management fees 85,849 86,478 70,132 69,926 Operators incentive fee 246,525 258,789 112,119 109,353 Legal 12,000 5,850 12,000 5,100 Professional fees 107,950 119,930 100,130 99,131 Insurance 51,754 48,601 16,528 48,601 Medical expenses 6,558 8,376 6,558 8,377 Transport and travelling 12,316 11,672 4,434 4,885 Repairs and maintenance 3,168 3,282 3,104 3,168 Bank charges and commission 8,172 1,439 885 784 Audit fee 19,375 17,685 9,890 8,400 Rent and rate 10,661 6,799 10,661 6,799 Advertising and publicity 3,366 2,861 3,366 2,861 Printing and stationery 1,751 2,879 1,683 2,854 Communication expenses 5,354 7,893 5,354 7,893 Subscriptions and donations 4,351 4,362 4,241 4,027 Sec penalty*** - 33,624 - 33,624 Annual General Meeting expenses 8,983 28,634 8,983 10,978 Other administrative expenses 121,507 82,885 66,186 34,941
1,840,132 1,730,910 994,028 983,406
*** SEC penalty
The payment relates to penalty for late filing of returns
35. Finance income
Interest earned on placement with banks 151,378 109,357 151,378 41,978
Dividend income - - 26,744 26,744
151,378 109,357 178,122 68,722
36. Finance costsInterest expense 753,916 717,026 778,020 717,026
2019 2018 2019 2018
37. Basic and diluted earnings per share
Profit after taxation 834,946 1,105,359 541,116 677,034
Number of shares 2,078,796 2,078,796 2,078,796 2,078,796
Earnings per share (basic and diluted) have been computed
for each year on the profit after tax attributable to ordinary
shareholders and divided by the number of issued and fully
paid up N0.50 kobo ordinary shares during the year.
Intragroup interests amounting to N24.104 million was
eliminated from group interest expense for the year ended 31
December 2019.
The Group The Company
The nature of administrative expenses comprises:
45
IKEJA HOTEL PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019Earnings per share (Kobo) 40 53 26 33
38. Information regarding directors and employees
38.1 Compensation of key management personnel
38.1.1 Emolument of the Directors
Chairman's fee 1,500 1,270 1,500 1,500
Other Directors fee 6,740 8,470 6,000 7,200
18,443 19,943 15,703 16,903
38.2 Scale of directors' remuneration
Number Number Number Number
N0 - N100,000 - - - -
N100,001 - above 13 14 6 7
13 14 6 7
N'000 N'000 N'000 N'000
38.3 Staff costs
Personnel compensation comprised:
Salaries and wages 2,137,574 3,084,638 1,173,980 1,254,937
Defined benefit gratuity scheme 147,007 163,538 84,754 73,336
2,284,581 3,248,176 1,258,734 1,328,273
38.4
Management staff 65 67 56 32
Non-management staff 1,010 1,015 411 442
1,075 1,082 467 474
38.5 Scale of employees' remuneration
N N
250,001 - 500,000 295 274 21 -
500,001 - 750,000 70 67 8 5
750,001 - 1,000,000 155 253 3 101
1,000,001 - 1,250,000 121 249 1 129
1,250,001 - 1,500,000 6 78 6 78
1,500,001 - 1,750,000 6 40 6 40
1,750,001 - 2,000,000 2 28 2 28
Above - 2,000,001 420 93 420 93
1,075 1,082 467 474
39. Related party transaction
Transactions Balance Transactions Balance
N'000 N'000 N'000 N'000
39.1 The Tourist Company of Nigeria Plc
296,823 6,572,300 295,747 6,455,477
39.2 Hans-Gremlins (Nigeria) Limited
During the year, the Group had significant business dealings with the related parties. The transaction value of these business
dealings are:
2019 2018
Ikeja Hotel Plc is a shareholder of the Company and some
Directors on the Board of the Company also serve on the
Board of Ikeja Hotel Plc. Transaction in the year relate to fee
income received for support services.
The average number of persons employed during the
year by category:
The number of directors excluding the Chairman whose
emoluments fell within the following ranges are:
Key management personnel are those having authority and responsibiity for planning, directing and controlloing the activities
of the company directly or indirectly, including all the directors (whether executive or ortherwise). Below is the key
management compensation during the year:
46
IKEJA HOTEL PLCNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
735 486,048 735 485,313
39.3 Minabo Limited
217,380 (2,028,881) 194,089 (1,811,501)
39.4 Associated Ventures International Limited
1,075,599 1,538,844 147,214 1,373,967
39.5 Alurum Investment Limited/Oma Trust Limited 371,659 3,468,880 331,929 3,097,221
39.6 Capital Hotels Plc (174,199) 589,514 220,638 763,713
39.7 Charles Hampton
12,802 234,697 234,697 234,697
39.8 IHL Services Limited
- 784,760 1,390 784,760
39.9 Punuka Attorneys & Solicitors
5,208 - 5,208 -
40. Financial commitments
IHL Services Limited is a member of the Ikeja Hotel Group.
Transaction in the year relates to expenses borne on their
behalf.
The Firm provides secretarial services to Ikeja Hotel Plc. The
Chairman of the Board of Ikeja Hotel Plc is the Senior
Partner in the Firm.
The Directors are of the opinion that all known liabilities and commitments have been taken into consideration in the
preparation of these consolidated financial statements. These liabilities are relevant in assessing the Company's state of
affairs.
One of the Directors of Ikeja Hotel Plc is also a director of
Minabo Limited. Transaction in the year relate to interest
payable on outstanding loan liability.
One of the Directors of the Company is also a director of
Associated Ventures International Limited. Transaction
relates to interest payable on outstanding loan balance.
One of the Directors of the Company is also a director of
Oma Trust Limited. Transaction in the year was in respect of
interest accrued on outstanding loan liability.
Capital Hotels Plc is a member of the Ikeja Hotel Group.
Transactions in the year relate to Loan repayments.
Capital Hotels Plc is a member of the Ikeja Hotel Group.
Transaction in the year relates to expenses borne on their
behalf.
The Company is a subsidiary of Ikeja Hotel Plc and some of
the Directors serve on the board of both companies.
Transaction in the year related to expenses incurred by Ikeja
Hotel on behalf of Hans Gremlin.
47
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
41. Management/technical service agreement
42. Deposit for shares
43. Contigencies
43.1 Guarantees and other capital commitments
43.2 Pending litigations and claims
The above legal advise was giving by Oku Enyore Oyibo (FRC/2019/NBA/00000019588) for G.M. Ibru & Co.
44. Events after the reporting date
45. Comparative information
Group Prior year Prior year
Note 31 Dec 18 Reclassification 31 Dec 19
* SPOL N'000 N'000 N'000
Revenue 30 13,267,667 (41,098) 13,226,569
Other income 33 354,415 (68,259) 286,156
Finance income 35 - 109,357 109,357
13,622,082 - 13,622,082
** SFP
Trade receivables
Gross amount of trade receivables 15 1,311,774 (56,154) 1,255,620
Advance to employees 40,264 (40,264) -
1,352,038 (96,418) 1,255,620
Other receivables and prepayment
Advance to suppliers 16 255,584 56,154 311,738
Advance to employees 16 - 40,264 40,264
255,584 96,418 352,002
Company Prior year Prior year
31 Dec 18 Reclassification 31 Dec 19
SPOL N'000 N'000 N'000
Revenue 30 7,290,231 (41,098) 7,249,133
Other income 33 144,800 (27,624) 117,176
Finance income 35 - 68,722 68,722
7,435,031 - 7,435,031
Prior year Prior year
Note 31 Dec 18 Reclassification 31 Dec 19
The Ikeja Hotel Plc entered into an agreement with Marriots Eame License and Services Company BVBA to manage
Sheraton Lagos Hotel on its behalf for which a basic fee of 1.5% of total revenue together with an incentive fee of 3% of
adjusted gross operating profit of the Hotel during each financial year. This agreement has been registered with the
National Office for Technology Acquisition and Promotion (NOTAP).
There were a total of five (5) lawsuits involving the Company out of which 4 of the suits are against the Company as at 31
December 2019. In the Directors best judgement based on reliance on the assessment of it’s the Company's legal
counsel, no material claims are likely to arise against the Company from the suits and there are no other suits involving
the Company outside the number disclosed. The Directors are not aware of any threatened or pending litigations which
may affect the continious operations of the Company.
The Directors are of the opinion that there were no significant events after the reporting date which would have had any
material effect on the state of affairs as at 31 December 2019 and on the profit or loss for the year ended on that day
which require disclosure in these financial statements.
Reclassifications have been made to some comparative numbers on the statements of financial position, profit or loss
and cash flows to align with the current years classification. These include: interest income and dividend received
reclassified from revenue and other income to finance income and other receivables reclassified from trade receivables to
other receivables and prepayments. A reconciliation is provided below:
The Directors are of the opinion that all known liabilities and commitments have been taken into consideration in the
preparation of the consolidated financial statements. The liabilities are relevant in assessing the group's state of affairs.
(2018: Nil)
This represents deposits made by Next International Limited for 31,200,000 units of shares at N3.00 each yet to be
alloted.
48
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019N'000 N'000 N'000
SFP
Trade receivables
Gross amount of trade receivables 15 783,003 (55,220) 727,783
Advance to employees 3,931 (3,931) -
786,934 (59,151) 727,783
Other receivables and prepayment
Advance to suppliers 16 55,923 55,220 111,143
Advance to employees 16 - 3,931 3,931
55,923 59,151 115,074
46. Forensic audit
47. Financial instruments risk management framework
The Group has exposure to the following risks:
•
•
•
•
47.1 Strategic risk
47.2 Capital Management Policies, Objectives and Approach
• To maintain the required level of financial stability thereby providing a degree of security to stakeholders.
•
• To retain financial flexibility by maintaining strong liquidity and access to a range of capital markets.
• To align the profile of assets and liabilities taking account of risks inherent in the business.
•
Ikeja Hotel Plc.'s operations are also subject to regulatory requirements within Nigeria where it operates.
47.3 Approach to capital management
The Forensic Audit instituted by the Securities & Exchange Commission (SEC) in the year 2017 into the affairs of the
Company was recently concluded. Consequent upon its conclusion, the Board expects a resolution to all legacy issues
including those matters disclosed in note 23.2.
The Board of Directors at the apex exercise and assume ultimate authority and responsibility for the corporate risk
management. The Group’s risk management policies are established to identify and analyze the risks faced by the Group,
to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. Ikeja Hotel Plc., through
its training and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
Strategic risk
Credit risk
Financial risk
Operational risk
The Group's approach to managing capital involves managing assets, liabilities and risks in a coordinated way, assessing
shortfalls between reported and required capital level on a regular basis.
The Group's primary source of capital used is equity shareholders’ funds.
This specifically focuses on the economic environment, the products offered and the market. The strategic risks arise
from a Group's ability to make appropriate decisions or implement appropriate business plans, strategies, decision
making, resource allocation and its inability to adapt to changes in its business environment.
The following capital management objectives, policies and approach to managing the risks which affect its capital
position are adopted by the Group.
To allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet
the requirements of its capital providers and of its shareholders.
To maintain financial strength to support new business growth and to satisfy the requirements of the contributors,
regulators and stakeholders
The Group seeks to optimise the structure and sources of capital to ensure that it consistently maximises returns to the
shareholders and customers.
49
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
47.4 Credit risk
47.5 Exposure to credit risk
2019 2018 2019 2018
N'000 N'000 N'000 N'000
Financial assetsRelated party receivables 6,752,300 6,455,477 6,752,300 6,455,477
Investments accounted for using the equity method - 147,014 798,722 798,722
Trade and other receivables 1,250,773 1,065,266 962,689 711,582
Cash and cash equivalents 5,656,450 6,292,323 3,224,817 2,524,787
13,659,523 13,960,081 11,738,528 10,490,569
47.6 Impairment of trade receivables
Group
0 - 30 31-60 61-90 91-120 121-180
181 and
above Total
2019 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Gross carrying amount 510,172 316,534 109,372 79,871 76,351 248,717 1,341,017 Default rate 1.18% 0.95% 1.44% 2.05% 1.48% 30.93%Lifetime ECL 5,995 2,992 1,573 1,640 1,126 76,918 90,244
2018
Gross carrying amount 321,680 344,033 103,242 42,248 27,736 416,683 1,255,620 Default rate 0.01 0.07 0.05 0.06 0.05 0.36 Lifetime ECL 3,930 25,723 5,341 2,514 1,498 151,347 190,354
Company0 - 30 31-60 61-90 91-120 121-180 181 and Total
2019 N'000 N'000 N'000 N'000 N'000 N'000 N'000
Gross carrying amount 369,279 278,861 91,009 56,603 76,351 98,534 970,637 Default rate 0.42% 0.62% 1.00% 1.25% 1.48% 1.95%Lifetime ECL 1,539 1,742 912 707 1,126 1,922 7,948
2018
Gross carrying amount 321,680 283,212 53,896 22,992 27,736 18,268 727,783 Default rate 0.01 0.02 0.05 0.05 0.05 0.05
Lifetime ECL 3,930 5,853 2,698 1,220 1,498 1,002 16,201
These macro economic variables include inflation and interest rates.
47.7 Operational risk
47.7 Operational risk (continued)
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
end of the reporting period was as follows:
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. Credit risk arises from loans and receivables, accounts receivables (excluding prepayments and VAT),
and cash and cash equivalent.
Exposure to credit risk is monitored on an ongoing basis, with credit checks performed on all clients requiring credit over certain
amounts. Credit is authorized beyond the credit limits established where appropriate. Credit granted is subject to regular review,
to ensure it remains consistent with the client’s creditworthiness and appropriate to the anticipated volume of business.
The calculation of impairment allowance is based on the expected credit loss (ECL) model. The measurement of expected credit
loss by the Group reflects an unbiased and probability-weighted amount that is determined by evaluating the range of possible
outcomes as well as incorporating the time value of money. Also, the Group considers reasonable and supportable information
about past events, current conditions and reasonable and supportable forecasts of future economic conditions when measuring
expected credit losses. The expected credit loss is the weighted average of credit losses with the respective risks of a default
occurring as the weightings
The Group adopts the simplified approach in calculating ECL which recognises lifetime ECL on trade receivables. The simplified
model is based on establishing historicalct loss rates for classes of trade receivables with similar characteristics and adjusting
those rates to reflect the effect of forward looking macro econimic variables.
Days
Days
The Group The Company
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes,
personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those
arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise
from all of the Group’s operations.
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the
Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
50
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
•
•
•
•
•
•
47.8 Financial risk
47.9 Liquidity risk
47.10 Liquidity risk (continued)
Contractual maturity analysis for financial liabilities - Group
Due within
one year
Due after one
yearTotal
N'000 N'000 N'000At 31 December 2019
Financial liabilities
Other liabilities 6,136,087 9,365,268 15,501,355
Trade and other payables 3,688,993 - 3,688,993
Dividend payable 109,845 - 109,845
9,934,925 9,365,268 19,300,193
At 31 December 2018
Financial liabilities
Other liabilities 5,970,244 9,232,847 15,203,091
Trade and other payables 4,054,306 - 4,054,306
Dividend payable 109,845 - 109,845
10,134,394 9,232,847 19,367,241
Contractual maturity analysis for financial liabilities - CompanyDue within
one year
Due after one
year Total
N'000 N'000 N'000At 31 December 2019
Financial liabilities
Other liabilities 5,604,688 10,006,846 15,611,534
Trade and other payables 1,279,658 - 1,279,658
Dividend payable 16,691 - 16,691
6,901,037 10,006,846 16,907,883
At 31 December 2018
Financial liabilities
Other liabilities 5,485,416 9,751,962 15,237,378
Trade and other payables 1,252,102 - 1,252,102
Dividend payable 16,691 - 16,691
6,754,209 9,751,962 16,506,171
47.11 Market risk
The Group has exposure to the following risks from financial instruments:
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior
management within each unit. This responsibility is supported by the development of operational standards for the management
of operational risk in the following areas:
requirements for appropriate segregation of duties, including independent authorisation of transactions
requirements for the reconciliation and monitoring of transactions
compliance with regulatory and other legal requirements
documentation of controls and procedures
training and professional development
Ethical and business standards
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The group at all times
maintains adequate committed credit facilities in order to meet all its commitments as and when they fall due. Repayment of
borrowings are structured to match the expected cash flows from operations to which they relate.
The Group's focus on the maturity of its financial liabilities is as highlighted above, classified as due or due within one year and
This is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
income or value of its holdings of financial instruments.
The primary objectives of the treasury function are to provide secure and competitively priced funding for the activities of the
Group and to identify and manage financial risks, including exposure to movement in interest and foreign exchange rates arising
from those activities. The components of the market risk are highlighted below:
The Group’s approach to managing liquidity is to ensure as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s reputation. The Group finances its operations through cash generated by the business and short-term investments with
a range of maturity dates. In this way, the Group ensures that it is not overly reliant on any particular liquidity sources. Liquidity
risk faced by the Group is mitigated by having diverse sources of finance available to it and by maintaining substantial unutilized
banking facilities and reserve borrowing capacity (where necessary).
51
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
47.12 Foreign exchange risk
47.13 Price risk
47.14 Fair value determination
The Group
Fair Amortised Carrying
value cost amount
N'000 N'000 N'000
At 31 December 2019
Assets
Cash and cash equivalents 5,656,450 - 5,656,450
Trade and other receivables - 1,250,773 1,250,773
Loans and receivables - 6,752,300 6,752,300
Investments accounted for using the equity method - - -
5,656,450 8,003,073 13,659,523
Liabilities
Trade and other payables 3,688,993 - 3,688,993
Other liabilities 6,245,932 - 6,245,932
9,934,925 - 9,934,925
At 31 December 2018
Assets
Cash and cash equivalents 6,292,323 - 6,292,323
Trade and other receivables - 1,065,266 1,065,266
Loans and receivables - 6,455,477 6,455,477
Investments accounted for using the equity method 147,014 - 147,014
6,439,337 7,520,743 13,960,081
Liabilities
Trade and other payables 4,054,306 - 4,054,306
Other liabilities 5,970,244 - 5,970,244
10,024,550 - 10,024,550
The Company
At 31 December 2019
Assets
Cash and cash equivalents 3,224,817 - 3,224,817
Trade and other receivables - 962,689 962,689
Loans and receivables - 6,752,300 6,752,300
Investments accounted for using the equity method 798,722 - 798,722
4,023,539 7,714,989 11,738,528
Liabilities
Trade and other payables 1,279,658 - 1,279,658
Other liabilities 5,621,379 - 5,621,379
6,901,037 - 6,901,037
47.14 Fair value determination (continued)
The Company (continued)
At 31 December 2018
Assets
Cash and cash equivalents 2,524,787 - 2,524,787 Trade and other receivables - 711,582 711,582 Loans and receivables - 6,455,477 6,455,477
Investments accounted for using the equity method 798,722 - 798,722
Fair values of equity securities with active markets were derived with reference to their markets prices as at the reporting period.
The primary objectives of the treasury function are to provide secure and competitively priced funding for the activities of the
Group and to identify and manage financial risks, including exposure to movement in interest and foreign exchange rates arising
from those activities. The components of the market risk are highlighted below:
The Group is exposed to transactional currency risk on sale and purchases that are denominated in a currency other than the
functional currency. This exposure is managed through a domiciliary account maintained to effect transactions denominated in
foreign currencies.
The Group is exposed to variability in the prices of commodities used in running its operations especially those relating to food
and beverages and housekeeping functions. Commodity price risk is managed within minimum and maximum guardrails
principally through multi-year fixed price contract with suppliers.
Fair value is the amount at which an asset or liability is exchanged between knowledgeable willing parties in an arms length
transaction. The carrying values of the Group's financial assets and liabilities are a reasonable approximation of fair values as at
the applicable reporting periods.
52
IKEJA HOTEL PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
3,323,509 7,167,059 10,490,568
Liabilities
Trade and other payables 1,252,102 - 1,252,102 Other liabilities 5,485,416 - 5,485,416
6,737,518 - 6,737,518
47.15 Financial instruments and fair values
47.16 Fair valuation methods and assumptions
47.17 Fair value measurements recognised in the statement of financial position
Financial assets and liabilities have been classified into categories that determine their basis of measurement and, for items
measured at fair value, such changes in fair value are recognized in the statement of comprehensive income either through the
statement of profit or loss or other comprehensive income. For items measured at amortised cost, changes in value are
recognised in the statement of profit or loss.
Level 3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
The carrying amounts of financial instruments shown on the statement of financial position in terms of their measurement basis
are shown as follows:
Cash and cash equivalents, trade receivables, trade payables and short term borrowings are assumed to approximate their
carrying amounts due to the short-term nature of these financial instruments.
The fair value of publicly traded financial instruments is generally based on quoted market prices, with unrealised gains in a
separate component of equity at the end of the reporting year.
Financial instruments that are measured subsequent to initial recognition at fair value, are grouped into Levels 1 to 3 based on
the degree to which the fair value is observable.
Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: for equity securities not listed on an active market and for which observable market data exist that the Group can use in
order to estimate the fair value;
53
IKEJA HOTEL PLC
Other national disclosures
54
IKEJA HOTEL PLC
STATEMENT OF VALUE ADDED
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 2018 2019 2018
N'000 % N'000 % N'000 % N'000 %
Revenue 12,515,560 13,226,569 7,327,284 7,249,133
Other income 440,949 286,156 33,698 117,176
Finance income 151,378 109,357 178,122 68,722
13,107,887 13,622,082 7,539,104 7,435,031
Cost of goods and services - foreign (2,210,802) (2,485,616) (1,623,338) (1,516,173)
Cost of goods and services - local (5,823,769) (5,197,125) (2,806,698) (2,695,236)
Value added 5,073,316 100 5,939,341 100 3,109,068 100 3,223,622 100
Applied as follows:
To pay employees:
Salaries wages and other staff costs 2,284,581 45 3,248,176 55 1,258,734 40 1,328,273 41
To providers of capital:
Finance costs 753,916 15 717,026 12 778,020 25 717,026 22
To pay Government:
Income and Education tax 369,420 7 439,283 7 191,989 6 190,615 6
To provide for assets replacement:
Depreciation and amortisation of
property, plant and equipment and
intangible assets
887,739 17 745,060 13 392,846 13 351,050 11
Retained for future expansion:
- Deferred taxation (57,286) (1) (315,563) - (53,637) (2) (40,376) (1)
- Retained profit for the year 834,946 16 1,105,359 20 541,116 17 677,034 21
Value added 5,073,316 100 5,939,341 105 3,109,068 100 3,223,622 100
The Group The Company
Value added represents the additional wealth, the group has been able to create by its own and it's employees' efforts. This statement
shows the allocation of the wealth amongst employees, providers of capital, government and that retained in the business for future
creation of more wealth.
55
IKEJA HOTEL PLC
FINANCIAL SUMMARY 31 DECEMBER 2019 2018 2017 2016 2015
N'000 N'000 N'000 N'000 N'000
Group
Statement of financial position
Assets
Property, plant and equipment 9,950,728 5,949,416 6,230,647 6,485,634 6,596,153
Investment Property 4,630,087 4,630,087 4,630,087
Capital work in progress 4,216,034 6,529,985 6,320,396 4,267,914 2,252,946
Intangible assets 4,619,383 4,487,764 4,500,948 32,031 23,401
Investment - 147,014 315,023 576,344 633,856
Loans to related party - - 6,151,565 5,914,936 3,653,928
Long term investment - - - - 26,496
Net current (liabilities)/assets 5,319,618 5,938,509 (1,730,939) (1,363,930) 1,254,617
Non-current liabilities (9,365,268) (9,232,847) (9,073,159) (8,347,268) (8,009,794)
Net assets 19,370,582 18,449,928 17,344,568 7,565,661 6,431,603
Equity and reserves
Share capital 1,039,398 1,039,398 1,039,398 1,039,398 1,039,398
Share premium reserve 1,381,072 1,381,072 1,381,072 1,381,072 1,381,072
Retained earnings 12,329,582 11,673,832 10,909,841 2,605,832 2,096,037
14,750,052 14,094,302 13,330,311 5,026,302 4,516,507
Non-controlling interest 4,620,530 4,355,626 4,014,257 2,539,359 1,915,096
Total equity 19,370,582 18,449,928 17,344,568 7,565,661 6,431,603
Statement of profit or loss and other
comprehensive income
Revenue from contract with customers 12,515,560 13,226,569 12,122,013 10,865,037 9,855,086
Profit/(loss) before tax 1,147,080 1,229,079 733,817 1,607,431 824,257
Income tax expense (312,134) (123,720) (130,205) (500,979) (263,527)
Profit for the year 834,946 1,105,359 603,612 1,106,452 560,730
Other comprehensive income for the
year 195,891 - (18,539) 27,607 99,450
Total comprehensive income for the
year 1,030,837 1,105,359 585,073 1,134,059 660,180
Per share data:
Basis and diluted earnings per share - Kobo 40 53 29 53 27
Net assets (kobo) 932 888 834 364 309
Earnings per share are based on the profit after tax divided by the number of issued and fully paid ordinary shares at the
end of each financial year.
Net assets per share are based on net assets divided by the number of issued and fully paid ordinary shares at the end of
each financial year.
56